Why Reaching a Price Target Does Not Determine Your Investment Return
Separate price target achievement from your own investment performance. Calculate returns using actual purchase and execution prices, dividends, costs, and holding periods, and assess claims about analyst hit rates.
Reaching a price target means the market price touched a specified level. Investment returns depend on actual purchases and sales, cash dividends, and costs, so the two outcomes need not match.
Identify whose starting price is being used
The report's reference share price may differ from your actual purchase price. If you buy after the stock rises following publication, reaching the target still gives you less than the original implied upside. Nor can everyone sell at a price touched only briefly during the trading day. Without a limit order or sufficient filled quantity, that high is not evidence of realized returns. Keep report figures separate from account execution records and use actual transaction prices to calculate performance.
Distinguish price return from total return
In a simple case of one purchase followed by selling the entire holding, net profit or loss equals sale proceeds plus dividends received, less purchase cost and expenses. State what you include in the return denominator so comparisons are meaningful. Reinvested dividends, additional purchases, and partial sales change the timing of cash flows, making a simple price difference inadequate for assessing overall performance. Overseas stock returns in local currency may also differ from returns translated into Korean won. Use actual applicable taxes and fees rather than inserting arbitrary standard figures.
Check how a hit rate is defined
Results differ depending on whether success means touching the target once or exceeding it on a specified end date. Decide in advance whether to use the initial or latest target if it changes along the way. Counting only stocks that rose, or omitting a large decline before the target was reached, exaggerates the performance an investor could have experienced. Alongside target achievement, check elapsed time, market performance over the same period, and the full observation set. These criteria help distinguish reproducible educational records from unverified promotional success rates.
Worked example
Hypothetical example: A report with a reference price of KRW 40,000 and a target of KRW 50,000 shows 25% potential price upside. Suppose an investor later buys 10 shares at KRW 45,000, sells them all at KRW 50,000, and receives a KRW 500 dividend per share. Profit before costs and taxes is KRW 50,000 + KRW 5,000 = KRW 55,000, or about 12.22% of the KRW 450,000 purchase amount. This calculation assumes the investor actually met the dividend eligibility requirements. Reaching the target alone does not mean the investor earned 25%.
What to check
- Have you distinguished the original reference price from your execution price?
- Have you checked dividend eligibility and the amount actually received?
- Have you distinguished returns before and after costs?
- Have you defined the evaluation end date and treatment of target revisions?
Sources and primary materials
This is educational material about research methods. For an actual company decision, verify the filings and primary sources for the relevant period.