Step 3: Target Price Ranges
The implied growth calculation tells you there’s money to be made owning ATI shares if the company gets its act together and returns to profitability. Now it’s time to get down to brass tacks and establish viable buy and sell target price ranges.
Calculating target prices starts with the assumption that the company will return to profitability at some point. Call that the recovery year. Then calculate target prices for the date when the recovery year’s results are reported. For instance, the recovery date would be early 2005 if you think the company will return to profitability in its fiscal year ending December 2004. It’s not a big disaster if the company recovers a year later than you expect. That event just pushes ...
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