When you run a DCF, you're taking all future free cash flows and discounting it to today. So essentially, that's the intrinsic value of the company at the present. If you're looking for the 1-year TP, would you discount the free cash flows back but only up to the period one year from the present?
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What does TP stand for?
Do you mean terminal value?
I think by TP he maybe means target price? It's usually written as PT though, "price target".
If so: No, discount back to present-day. The 1-year price target is taking into consideration assumptions on forward-looking catalysts that drive the thesis of the argument supporting the PT.
Technically you can discount back to one year from now to get the 1-year price target. Think about it. You have your assumptions which give you free CFs for the next t years and a terminal value. You get the present value by discount everything back to today. Then, why should it be different if you want a value one year from now. My 2 cents.
Theoretically, you discount it to today and then x cost of equity to get the target price 1 year out; in practice you should just discount it to today.
Why the difference in theory and practice?
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