On this basis it could be argued that, at that time, since expected returns were well below historic norms, prices were too high.
Things are almost never clear on Wall Street, or when they are, then it’s too late to profit from them.
The sell side analyst’s target prices do not estimate fair value. DCF estimates do just that. Investors should not confuse the two.
Even with overly optimistic earnings estimates companies regularly ‘beat’ the estimates. What gives?
Since analysts’ reports are so important in our work of identifying and studying companies to invest in, we need to look at the strengths and weaknesses of these reports.