Some tend to try and build risk into a DCF base case like Forsyth Barr very often do, but that just leaves a prospective investor in a position where they must then analyse very carefully for themselves exactly where the analyst has been fair or unfairly conservative. It means their valuations can be very often a bit low too.
Some prefer to apply company set goals and targets and forecast beyond there based on available market analysis and product cycle growth curve estimates for each market and product. At the end of the day the company is the closest to the business, they may not be correct and there are always unknowns, they may perhaps though have the best window seat.
But, at the end of the day if anyone is trying to use DCF to model short term (under six month) moves in share price, forget it, there are much better type of model for that, DCF won’t help you with that much.
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