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Which companies are trading at the largest discount to their consensus target price?

Target prices usually relate to a 12-month timeframe. Here are 20 stocks tipped by brokers to rise by more than 40% over the next year.

When it comes to dishing out the “buy” ratings, stockbrokers are not exactly reluctant.

Put another way, brokers are loath to apply a “sell” rating to shares of a company that might potentially be a future client.

So, take “buy” ratings with a pinch of salt, especially when it is the house broker making the recommendation.

That being said, there is no rule – even an unwritten rule – that says a broker has to go mad with its target price. Most analysts are inveterate number crunchers with spreadsheet-based models they use to apply a target price to a share (usually over a 12-month timeframe) and this can be an indication as to just how enthusiastic they truly are about a share.

To be sure, the maxim “garbage in, garbage out” applies and if an analyst’s underlying assumptions are wrong then no matter how finely tuned the spreadsheet model is, the target price is likely to be as much use as last week’s losing lottery ticket.

Nevertheless, Proactive thought it would be interesting to check out which stocks are trading at levels that are most out of whack with the consensus target price.

We restricted our search to those companies that are followed by at least three brokers so as to weed out the tiddlers that are only covered by their house broker and one other broker hoping to be that company’s next house broker. Even so, caution is advised; a lot of companies these days are paying research houses to produce investment analysis and it is possible that some of these “research house for hire” companies’ target prices have been included in the data.

Below is the list of 20 stocks on the London Stock Exchange that are trading at the largest discount to the consensus target price.

Rank Company name Number of brokers covering the stock Consensus target price Last night’s closing price Upside to target price
1. (, ) 3 57p 20.4p 179%
2. (, , , ) 5 62p 26.5p 134%
3. () 8 1,811p 932p 94%
4. Puretech Health PLC 3 660p 343p 92%
5. () 3 37p 19.75p 87%
6. (, , ) 3 15p 8.25p 82%
7. Georgia Capital PLC 3 1,146p 636p 80%
8. () 3 211p 130p 62%
9. () 3 244p 154.6p 58%
10. () 3 98p 63.8p 54%
11. SEPLAT Petroleum Development Co PLC 4 154p 101p 52%
12. () 3 35p 23p 52%
13. Anexo Resources PLC 4 219p 144p 52%
14. () (The) PLC 3 242p 159.2p 52%
15. () 3 410p 282p 45%
16. TinyBuild Inc 4 310p 215p 44%
17. () 3 740p 514p 44%
18. () 4 1,740p 1,210p 44%
19. (, ) 3 783p 546p 43%
20. French Kier PLC 3 177p 123.8p 43%

 

Read More: Which companies are trading at the largest discount to their consensus target price?

2021-07-23 08:35:00

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