We’re in the midst of earnings season and this is when long-term investors start paying attention.
When a company’s earnings beat analyst predictions, the stock can soar.
But an earnings miss can push it over a cliff.
Look what happened to Walmart Inc. (NYSE: WMT) yesterday morning after the company gave lower-than-expected 2026 earnings guidance.
WMT 1-Month, 1-Hour Candles; SteadyTrade
By the way, WMT is one of my monthly swing trade picks for my StocksToTrade Advisory service. I think this is merely a temporary pullback, and the stock will recover nicely over time.
Along with earnings predictions, analysts publish price targets.
The question is, should we be listening?
It depends…
Not all price targets are created equal. Some are useful, some are garbage…
And some are just another pump-and-dump tool in disguise.
Today, let’s talk about what analyst price targets actually mean, when they matter, when they’re total BS.
And more importantly, how you can trade these setups for gains.
Table of Contents
What Are Analyst Price Targets?
An analyst’s job is to analyze a company’s financials, growth prospects, and industry trends to predict where they think the stock is headed.
Based on their research, they’ll issue a rating like:
Buy
Sell
Hold
Strong Buy or Strong Sell
And with that rating, they’ll attach a price target—a number they believe the stock will reach in a given timeframe.
And when you’re dealing with big, well-known companies like Apple Inc. (NASDAQ: AAPL), Amazon Inc. (NASDAQ: AMZN), these targets tend to be more reliable.
The analysts covering these names are from top-tier firms, and they’re experts at reading and interpreting financial statements.
And many times it can take a stock months to reach these price targets. They’re designed to guide long-term or buy-and-hold investors.
And that’s the problem…
If you’re day trading or have a small account, are you really going to buy 10 shares of Tesla Inc. (NASDAQ: TSLA) and wait a year and a half for it to double? Probably not.
It’s not a viable way to grow your account quickly.
Why Price Targets Don’t Work for Penny Stocks
Things start to get sketchy when we talk about price targets for low-priced, highly volatile stocks, aka penny stocks.
Here’s where you have so-called “analyst firms” throwing out ridiculous price targets on crappy companies.
Remember, we don’t care about the fundamentals of a penny stock. We use them for day trading only since they might not even be around next month or even next week.
As I like to say, “Trade ‘em, don’t date ‘em.”
I’m talking about some $0.50 stock suddenly getting a $10 price target from a no-name research firm.
Ain’t gonna happen.
What these penny stock “analysts” are doing is running a modern-day pump-and-dump scheme.
Read my blog post to learn exactly how a pump and dump works.
How to Trade These Price Target Pumps
You might be thinking, “Okay, this all sounds shady, but can I trade it?”
The answer is yes…
These setups can be insanely predictable if you know what to look for.
Use This Checklist Before Trading:
Not every price target pump is worth trading.
Make sure it fits these criteria:
- Low float stock: Under 10M shares is ideal
- High volume spike At least 2–3x normal volume
- Past history of running on news
- Past history of dilution: This is a pump-and-dump, after all.
If a stock checks all these boxes, it’s game on.
Trade the Initial Spike, But Don’t Get Greedy:
These stocks rarely hit the ridiculous price targets. But they do spike in the short term as traders pile in.
You want to ride the momentum up and get out before the dump.
- Enter on the initial volume surge.
- Sell into strength: Don’t hold for too long.
And if the stock fails to hold key levels (like VWAP) or stalls after the initial spike, it’s a sign the insiders are selling. That’s your cue to get out.
Use the Right Tools:
To track the quick price action of these penny stocks, you need a robust trading platform with real-time data, charting, technical indicators, and more.
My top pick is StocksToTrade, and I use it every day,
It features everything mentioned above…PLUS, right now, you can get two weeks of both the STT platform and our Breaking News Chat service for $17.
Grab your 14-day StocksToTrade + Breaking News Chat trial today for only $17!
My Final Thoughts…
I love trading these setups. They’re repeatable and can offer great opportunities if you’re fast.
But remember the following:
- Never believe in sketchy price targets: They are marketing tools, not actual predictions based on fundamental research.
- Know the game: Penny stock CEOs and insiders are not your friends. They’re using these faux targets to dump shares.
- Focus on price action, not hype: Use our Breaking News Chat service, past history, and volume to guide your trades.
At the end of the day, the stock market is a battlefield.
My goal for you is to survive each battle so you can trade again the next day and continue to grow your account gradually and safely.
For more trading insight and mentorship, join my StocksToTrade Advisory service.
You’ll also get a monthly newsletter with a list of my top picks, three weekly videos with my watchlists, bonus reports, and more.
Sign up for StocksToTrade Advisory today!
Have a great weekend, everyone. See you back here on Monday.
Tim Bohen
Lead Trainer, StocksToTrade
P.S.
Next Wednesday, after the market closes, Nvidia’s CEO, Jensen Huang, will address Wall Street’s biggest banks and make a huge announcement.
We think it’s going to set the AI sector on fire.
That’s why my friend and fellow trader, Tim Sykes, is going live from Las Vegas at 8 pm ET the night before to talk about what will happen and to share his own AI TRADE IDEA with you…
All before the sector takes off Thursday morning.
Reserve your spot for this free webinar on February 25th.
Trust me, you don’t want to miss this.