Case study on Valuation

Stock valuation is often presented as a simple process, but in reality it is much more difficult; the mathematics are simple, but determining the appropriate inputs that will be used is much more difficult. Consider that, for any valuation model, you have to use estimates or forecasts of selling price in the future, next year’s dividend, and the required return. Each individual investor can generate different values for all of these using the exact same historical data.

To illustrate this, go to http://finance.yahoo.com/  and type in the ticker symbol for your favorite company. Then, under the heading “Analyst Coverage,” select the option “Analyst Opinion.” You should see “Recommendation Summary”, “Price Target Summary,” and “Upgrades & Downgrades History.” Notice how much difference in opinion there is among analysts about this company’s stock value? Answer the following questions about the company you selected.
 
1.  What is the high and low target price for this stock?

2. Have there been any upgrades or downgrades by analysts and changes in recommendation? Is there total consistency in these recommendations?