How many years of financial projections do you estimate out?
Hi I'm currently a junior in uni working on an equity research case - wondering how many years out would a model be projected?
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Yeah I also wonder this, sometimes I've seen models projected out a couple of years, other times I've seen many years of estimates, don't know how far out is meaningful
Depends on the industry.
For established businesses that have some economic sensitivity, I think anything more than 18-24 months is silly as no one knows what will happen beyond that.
There are some cases (like biotech, profitless tech) where a longer horizon is necessary.
Biotech I go to 2035. You have to take into account patents etc.
Interesting, how do things like patents (and anything else) make projections go out further than usual? What's the rationale for that / why are they relevant for projection time periods?
1yr and slap a PE on it
We usually have 2 full years of estimates past the current year. So right now our typical model goes out to 2025, sometime in Feb/March of 2024 we will put out 2026.
Depends on your strategy. We usually do 5-6yrs, though depending on the space I sometimes go as far as 10yrs to get a sense of where something shakes out very LT
Bernstein Tesla model has only 1 quarter forecasted - so flair
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