From Wikipedia, the free encyclopedia Target price
Target price
Target price may mean different things: these may be products sold by the competitor. If one’s
1. The price at which a stockholder is willing to sell product is unique in the market, one must rely on market
his/her stock. research or even entrepreneurial instincts to determine
2. The price at which a seller projects that a buyer will the target price.
buy a product. In manufacturing, the target price may be used to cal-
Target price (Stock Market) culate the target cost. This is the maximum cost that the
In the Stock Market, target prices are created by seller is willing to pay to have the product manufactured.
stock market analysts and the term itself can refer to a When the actual cost of manufacturing increases beyond
number of things. It can refer to the highest price that the target cost, it may no longer be profitable for the sell-
an analyst thinks a stock will reach in a given year. It er to sell the product. Simply increasing the sales price to
can also refer to the price at which an analyst believes it cover for the increase in overhead would increase the ac-
will have reached its highest value potential. Usually this tual sales price over the intended target price. This may
rating translates to the price at which the analyst would cause lower sales than expected, leading to a loss larger
be willing to sell the stock. In most cases, analysts who than the increase in overhead.
cover a given stock for which they have created a target The target price for any product should be reviewed
price will include a time frame; typically one year from periodically, as market conditions change. Inflation plays
the time of the report. a key role as time progresses. As the cost of fuel and labor
To produce a target price an analyst will take into increase, the manufacturer may not be able to meet the
consideration earnings, earnings potential, historical target cost. The seller, if he/she wishes to continue the
trends in industry and sub-industry groups, as well as sales of the product, must increase the sales price to re-
various valuation metrics such as P/E ratio. flect the higher cost to market. But, as the cost of living
Target price (Sales and Manufacturing) is the price at increases, consumers may be more or less willing to pur-
which a seller projects that a buyer will buy a product. chase the same product at a price higher than the ini-
This projection is reached by market research and calcu- tial target price. In order to downplay the price increase
lating the cost to market of the product. In turn, the tar- to the consumers, sellers and manufacturers may utilize
get price may be used to calculate the target cost for a transition tactics such as redesigning, resizing, repackag-
product. ing, and reviving.
The easiest measure of target price is to compare
the product with similar products of its kind. Sometimes,
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