What is the Point of a Price Target?

What is a price target, and what is it for? Eric

Savitz and David

Gaffen report today on all the new price targets being put on Google: with

the stock trading around the $650 level, Credit Suisse has upped its price target

from $600 (which I guess would imply a "sell" rating) to $800 (phew!

the "buy" rating can remain!), while Pacific Crest Securities, trying

to stay ahead of the curve, has a price target of $850.

Investopedia reckons

that a price target is "the price at which the trader would like to exit

his or her existing position so that he or she can realize the most reward"

– but that’s clearly not the case here, since every time the target is

reached, the goalpost just gets moved, and there certainly seems to be precious

little exiting going on. So if it’s not that, what is it? What’s the difference

between Pacific Crest’s $850 target and CIBC’s $700 target? Is it just a way

of showing degrees of bullishness? Is there anything that an investor can actually

do with these numbers?

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