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by nv-vn
2446 days ago
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No, undervalued means the market valuation of the company is less than what it should be. I.e. Deutsche Bank believes that Google's profits summed up for the future (and discounted to account for inflation/risk) will exceed what people are buying it for. As an example, if a share is $10 and it pays $5 per year then it's undervalued because it's value ≈ $5 + .9($5) + .9²($5) + .9³($5) + .... This is essentially how Deutsche Bank is setting their price target. Since their target exceeds the equilibrium price of Google, they have decided it's undervalued. |
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