Analyst recommendation and target price
Analysts' recommendations data aggregates the analysts' outlook on stocks for a time frame of a year. In SamurAI, we allow you to incorporate the data in advance ways to get the most out of these data points.
Analysts recommendation Datapoints
- Analyst recommendation - An aggregated outlook of the analysts on a specific stock. It is on a scale from 1 (strong buy) to 5 (strong sell).
- Analyst recommendation change - is the change in the scale compared to one week, one month, and six months. It is used to see a trend in the recommendation.
- Target price - It is the distance of the analyst's target price for one year from the current stock price (in percentage).
- Future PE - is the PE ratio, but using the exected Earnings Per Share for next year according to aggregated analysts' projections.
- Strike distance from target price - is part of the 'value on strike' (read more here). It is the distance from the target price, but using the strike instead of the current stock price. It can be used, for example, to see what would be the distance if the stock would be assigned at that strike price.
- Scenario engine - You can use distance from the target price as an input in the scenario engine. This will allow you to see the position's value if the stock will arrive at the target price (really powerful).
Why using these data points:
The analyst recommendations data points give another dimension to the scanning process. By incorporating these data points, we can filter out trades that don't fit our view and focus on the most important trades. The analyst recommendations data points are in low correlation to options data points such as IV, probabilities, etc. and low correlation to technical indicators. Because of this, incorporating them can help us find trades more holistically.
Example use cases:
You can use the data points in an infinite amount of ways. here are some ideas:
- Show long call trades that will explode in value if the stock arrives at the target price.
- Sell covered calls on stocks that have dividends, and the Future PE ratio is relatively cheap.
- Find trades on stocks that analysts rate strong buy.
- Sell puts on profitable companies that, if assigned, will be 50% away from target price (meaning the analysts expect a 50% increase).
There are many more ways to use these data points and incorporate them into your trading. If you have any questions or need help - don't hesitate to reach out to us.