So I have limited experience with investing in securities. However, there’s this small cap company I’m looking at that is trading at about $25. The average price target is about $40. Based on my limited research, that’s the number the firm believes the stock will be at in one year. That’s a 60% increase.
There are firms that are showing the price target of $40 and a “sell” recommendation. I looked at some of their buy recommendations on other stocks and some of them have price targets that are about the same as the current stock price (and the stock price hasn’t materially changed since the recommendation came out).
How can a single company that believes the price will increase 60% in a year recommend selling the stock while they recommend buying a stock that has an estimated price increase of less than 5%. I get that this is a small cap company so they aren’t paying as much attention to it, but shouldn’t the numbers at least be internally consistent?
And don’t worry, I’m not looking to trade this stock, just want to understand what may be going on here and what piece of the puzzle I’m missing.