We're going to do a couple of workouts here that will give us some practice with coming up with target prices and stock recommendations. In the first workout, we've been told that an analyst has conducted some analysis on a company and has calculated the company's implied Enterprise Value and you can see that here in row 9. We've been asked to calculate the implied target price and identify the investment recommendation. That's a buy, sell, or hold recommendation that we would expect the analyst to assign and we've also been asked to calculate the upside or downside potential. The other information that we've been given here is the net debt of the company and the share count the current share price and the 52-week trading range.

The first thing we're going to do is to calculate the implied target price and for that we first need to calculate the implied equity value. So let's take the Enterprise Value deduct the net debt. And that gives us an implied equity value of 71,087.5 and when we divide that by the share count that gives us our target price of 3.85 now before I come up with my investment recommendation, I'm first going to calculate the upside or downside Potential from that target price. So I take the target price divide it by my current share price minus one and that gives me upside potential of 1.2%. Now that's only a fraction above the current share price and we also notice that our target price sits right in the middle of the trading range for the last year. So I don't think this provides enough conviction for a buy recommendation, so I would expect the analyst to put this on a hold recommendation.

Now, let's have a look at the next workout. As with the previous example, we need to calculate an implied target price and identify the investment recommendation, but the numbers here are slightly different. So let's start again by calculating the implied target price. And that needs the implied equity value first, so we'll grab the Enterprise Value deduct the net debt. And that gives us an implied equity value of 32,814.8. The target price is there for just the equity value divided by the share count and that gives us an implied target price of 7.68. Again, my next step is going to be to calculate the upside or downside potential. So we take our target price. Divide by the current share price minus one and that gives us downside potential of 12.7% and that is materially below the current share price. Also that target price is well below the trading range for the last year. So I think this provides quite a lot of conviction for the analyst to put this stock on a cell recommendation.