A single price target gives you one number and a false sense of precision. A bull/base/bear framework gives you a range — and forces an honest answer to a better question: what would actually have to be true for each outcome to happen?
What each case represents
- Bear case: a genuinely plausible downside — not a worst-case doomsday scenario, but what happens if things go worse than expected (growth slows, margins compress, a real risk materializes).
- Base case: the most likely path if current trends broadly continue — the "if nothing surprising happens" outcome.
- Bull case: a genuinely plausible upside — not maximum optimism, but what happens if the company's own stated opportunities actually play out.
The key word in all three is plausible. A useful bear case isn't "the company goes bankrupt for no reason," and a useful bull case isn't "the company becomes ten times bigger overnight." Each should be a coherent story you could actually imagine happening, with an identifiable cause.
Why a range beats a single number
A single price target implicitly claims a false level of precision — it suggests the future is knowable to the dollar. A range is more honest about what forecasting actually is: a set of assumptions about revenue growth, margins, and valuation multiples, each of which could reasonably land in a different place. Three scenarios make those assumptions visible instead of hiding them behind one confident-looking number.
It also does something practically useful: it shows you the shape of the risk. A stock where the bear case is only modestly below the current price but the bull case is dramatically above it has a very different risk/reward profile than one where bear and bull are roughly symmetric around today's price — even if their base cases look identical.
The honest limitation
None of the three scenarios is a prediction, and the real outcome often lands somewhere between them, or occasionally outside all three entirely — genuine surprises happen. Scenarios are a structured way to reason about a range of futures, not a forecast of which one will occur.
The practical takeaway
Use the spread, not just the base case: how far apart bull and bear sit relative to the current price tells you how much uncertainty the market is really pricing in — which is often more useful than fixating on which single scenario feels most likely today.