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A health-care stock is being trimmed into strength even as its price target is lifted — the disciplined combination of taking profit and revising upward the fundamental view simultaneously.
The position was opened at too high a price and too quickly when the Iran war broke out, and has since delivered what its manager characterizes as a remarkable turnaround.
The Trade-Off: Higher Target, Smaller Position Raising a price target while selling into the rally is a move the buy-side understands immediately: the stock has closed much of the gap to intrinsic value, so the risk-reward on the full position no longer justifies the weight.
Trimming into strength is not a reversal of conviction — it is a recognition that the margin of safety has narrowed as the share price has moved.
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