shares of inspired entertainment (INSE) has risen 2.6% over the past four weeks to close its final trading session at $12.85, but if Wall Street analysts’ short-term price targets are any indication, the stock is still showing a solid performance. There may still be a rise. Going by the target price, the average quote of $19.75 indicates a potential uplift of 53.7%.
The average consists of four short-term price targets ranging from a low of $16 to a high of $27 with a standard deviation of $4.92. The lowest estimate shows a 24.5% increase from current price levels, while the most optimistic estimate shows a 110.1% increase. If above the range, you should pay attention to the standard deviation here, as it helps to understand the variability of the estimates. The smaller the standard deviation, the greater the agreement among analysts.
Consensus price targets are highly sought after by investors, but the ability and impartiality of analysts to set price targets has long been questioned. And investors who base their investment decisions solely on this tool will undoubtedly do themselves a disservice.
However, an impressive consensus price target is not the only factor pointing to potential upside for INSE. This view is reinforced by consensus among analysts that the company will report better earnings than previous estimates. Even if the revision trend of the earnings forecast is positive, it is not known how much the stock price will rise, but it has been proven to be effective in predicting the rise.
Price, Consensus, EPS Surprise
Here’s What You May Not Know About Analyst Price Targets
A price target is one of many pieces of information about a stock that misleads investors far more often than it guides, according to researchers at several universities around the world. In fact, empirical research shows that, regardless of the degree of agreement, price targets set by multiple analysts rarely indicate where the price of a stock is actually headed.
Wall Street analysts have deep knowledge of company fundamentals and business sensitivities to economic and industry issues, but many tend to set overly optimistic price targets. Why?
They usually do it to increase interest in equity in companies with which their company has an existing business relationship or is looking to partner. , often inflate the price targets set by analysts.
However, the tight clustering of price targets represented by low standard deviations indicates that analysts have a high degree of agreement about the direction and magnitude of the stock’s price movement. That doesn’t necessarily mean the stock will reach its average price target, but it could be a good starting point for further research aimed at identifying potential underlying drivers.
That said, investors shouldn’t ignore price targets entirely, but basing investment decisions solely on target prices can result in disappointing ROI. Therefore, price targets should always be treated with great skepticism.
Here’s why INSE may still have many advantages
Analysts have recently become more optimistic about the company’s earnings prospects, as evidenced by strong agreement among analysts to revise their EPS estimates higher. And that could be a good reason to expect the stock price to rise. After all, empirical research shows a strong correlation between earnings forecast revision trends and short-term stock price movements.
For this year, one estimate was higher in the last 30 days compared to no negative correction. As a result, Zacks Consensus Estimate increased him by 5.6%.
In addition, INSE currently holds Zacks Rank #2 (Buy). This means we are in the top 20% of over 4,000 stocks that we rank based on four factors related to earnings projections. Given the company’s impressive external audit track record, this more clearly indicates the stock’s near-term upside potential. A complete list of today’s Zacks Rank #1 (strong buy) stocks can be found here >>>>
So, while the consensus price target may not be a reliable indicator of how much INSE can profit, the direction of price movement it implies seems to be a good guide.
Sachs Names ‘Best Single-to-Double Pick’
Out of thousands of stocks, each of our five Zacks experts picked their favorites to surge +100% or more in the coming months. Out of these five, research director Heraz Mian chose her one with the most explosive advantages.
A little-known chemical company, up 65% from last year, but still cheap. With relentless demand, his skyrocketing earnings forecast for 2022, and a $1.5 billion stock buyback, retail investors are ready to jump in.
The company matches other recent Zacks stock doublings as Boston Beer Company surges +143.0% in just over nine months and NVIDIA surges +175.9% in a year. or may exceed it.
Free: See Top Stock and 4 Runners Up >>
Want the latest recommendations from Zacks Investment Research? Download today the 7 Best Stocks of the Next 30 Days.Click to get this free report
Inspired Entertainment, Inc. (INSE) : Free Inventory Analysis Report
Click here to read this article on Zacks.com.
Zacks Investment Research
The views and opinions expressed herein are those of the authors and do not necessarily reflect those of Nasdaq, Inc.