Upgrade Scenario Builder
An imaginary chip stock, "NOVA". Set the numbers an analyst note would contain — the 3D chart updates live.
Drag to rotate · green pillar = price today · gold ring = target zone
The VocabularyWhat a rating actually is
It's a 12-month opinion
A price target is one analyst's estimate of fair value about a year out, built from an earnings model (revenue growth × margins × a valuation multiple). Change any input and the target moves — it's an argument, not a promise.
Upgrades move prices — briefly
Studies of analyst revisions find upgrades from influential firms cause a same-day pop (often 1–4%) with partial drift afterward. The information is priced in fast; by the time you read a headline roundup, the easy move has usually happened.
Base rates are humbling
Across large samples, 12-month targets miss by wide margins — research (e.g., FactSet data reviews) repeatedly finds average errors in the 15–30% range, and targets are systematically optimistic: "Sell" ratings are rare because banks court corporate clients.
Worked ExampleThe upside math, step by step
| Step | Formula | Example |
|---|---|---|
| 1. Implied upside | (Target − Price) ÷ Price | ($125 − $100) ÷ $100 = +25% |
| 2. Sanity-check the spread | High target − low target | If targets run $90–$180, "consensus" is nearly meaningless |
| 3. Discount for optimism | Historical miss ≈ 15–30% | A +25% target with ±20% typical error is a coin-flip, not a signal |
| 4. Check the reason | Estimate change > rating change | An upgrade driven by raised earnings estimates carries more information than a multiple re-rating |