Investors evaluate their options as stock price moves upward.
In recent trading, shares of TransAlta Corp (Symbol: TAC) have exceeded the average analyst 12-month target price of $14.18, currently selling at $14.29 per share. When a stock hits an analyst’s target, the analyst typically considers two options: downgrade the stock based on valuation or raise the target price. The decision may also rely on recent business developments that contribute to the stock’s increase. If the company’s outlook is positive, it may be the right moment to adjust that target price higher.
A total of nine analysts in the Zacks coverage universe have contributed to the average target for TransAlta Corp. However, this figure represents a mathematical average, and individual analyst predictions vary widely. For example, one analyst has set a target as low as $11.36, while another forecasts a target of $17.50, resulting in a standard deviation of $2.091.
The rationale behind examining the average target price is the concept of “wisdom of crowds.” It combines input from several analysts to create a broader perspective, rather than focusing solely on one expert’s opinion. As TAC surpasses the average target price of $14.18, it prompts investors to reconsider their stance: Is $14.18 merely a stepping stone towards a higher target, or is the valuation now overextended, suggesting it may be time to realize some gains?
| Recent TAC Analyst Ratings Breakdown | ||||
|---|---|---|---|---|
| » | Current | 1 Month Ago | 2 Month Ago | 3 Month Ago |
| Strong buy ratings: | 6 | 7 | 6 | 6 |
| Buy ratings: | 1 | 1 | 1 | 1 |
| Hold ratings: | 2 | 1 | 1 | 0 |
| Sell ratings: | 0 | 0 | 0 | 0 |
| Strong sell ratings: | 0 | 0 | 0 | 0 |
| Average rating: | 1.56 | 1.33 | 1.38 | 1.14 |
The average rating descends from 1 to 5, where 1 signifies a Strong Buy and 5 equates to a Strong Sell. This article utilized data from Zacks Investment Research via Quandl.com. To stay informed, check the latest Zacks research report on TAC — available for free.
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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
