Frontline plc (Symbol: FRO) recently experienced a surge in trading, with shares surpassing the average analyst 12-month target price of $23.67 and closing at $23.92/share. When a stock reaches the target set by an analyst, the analyst has two options – either downgrade the stock based on valuation or adjust the target price upwards. A lot also depends on the fundamental business developments driving the stock price higher – if there are positive signs for the company, it might be time to raise the target price.

Within the Zacks coverage universe, there are 3 different analyst targets contributing to the average for Frontline plc. However, the average is just a mathematical figure. There are analysts with lower targets, with one looking for a price of $22.00, while on the other end of the spectrum, one analyst has set a target as high as $26.00, resulting in a standard deviation of $2.081.

The purpose of looking at the average FRO price target is to tap into the wisdom of crowds, compiling the inputs of all individual analysts to form the ultimate number rather than relying solely on the perspective of a single expert. With FRO surpassing the average target price, investors are provided with a signal to reevaluate the company and ponder whether $23.67 is just a stepping stone to an even higher target, or if the valuation has become stretched, prompting some profit-taking.

The average rating provided in the table ranges from 1 to 5, where 1 indicates Strong Buy and 5 indicates Strong Sell. The data for this article is from Zacks Investment Research via Quandl.com. You can access the latest Zacks research report on FRO for free.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.