PT - JOURNAL ARTICLE AU - Yuan Yin AU - Ken Peasnell AU - Martien Lubberink AU - Herbert G. Hunt III TI - Determinants of Analysts’ Target P/E Multiples AID - 10.3905/joi.2014.23.3.035 DP - 2014 Aug 31 TA - The Journal of Investing PG - 35--42 VI - 23 IP - 3 4099 - https://pm-research.com/content/23/3/35.short 4100 - https://pm-research.com/content/23/3/35.full AB - Prior literature suggests that earnings multiple–based valuation methods play a dominant role in practical equity valuation. This study examines how sell-side analysts select the price–earnings multiples for the firms they follow. The authors analyze a sample of P/E multiples applied by analysts of some leading brokerage firms. The results suggest that analysts tend to assign higher P/E multiples to firms with superior earnings growth prospects in the near term and in the longer run, whereas those with high levels of risk measured by financial leverage, earnings volatility, book-to-market, and stock price volatility receive lower P/E multiples.TOPICS: Fundamental equity analysis, portfolio theory