Shares of Alpine Immune Sciences, Inc. (ALPN) have experienced a significant increase of 34.9% over the past four weeks, closing the last trading session at $13.38. However, analysts believe there is still a solid upside potential for the stock based on short-term price targets. According to these targets, the mean estimate of $24 suggests a potential upside of 79.4%.
It is important to note that the mean estimate is derived from seven short-term price targets, which have a standard deviation of $5.26. This standard deviation indicates the variability of the estimates, with a smaller standard deviation suggesting greater agreement among analysts.
While the consensus price target is a widely followed metric by investors, it should not be the sole basis for making investment decisions. The ability and impartiality of analysts in setting price targets have often been questioned.
Yet, for ALPN, an impressive average price target is not the only positive indicator. There is strong agreement among analysts about the company’s potential to report better earnings than previously predicted. Although a positive trend in earnings estimate revisions does not directly determine the stock’s potential gains, it has proven to be a reliable predictor of an upside.
1. What does standard deviation indicate?
Standard deviation measures the variability or dispersion of a set of values. A smaller standard deviation implies greater agreement among analysts.
2. Should investors solely rely on price targets?
No, investors should not solely rely on price targets when making investment decisions. Price targets should be treated with skepticism and further research is necessary.
3. What factors can influence inflated price targets?
Analysts may set overly optimistic price targets to generate interest in shares of companies that their firms have existing business relationships with or are looking to be associated with.
4. What is the significance of trends in earnings estimate revisions?
Empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements. Positive revisions suggest potential upside in the stock.
5. What is the Zacks Rank #2 (Buy) for ALPN?
The Zacks Rank #2 (Buy) signifies that ALPN is among the top 20% of stocks based on four factors related to earnings estimates. It is a conclusive indication of the stock’s potential upside in the near term.