About Scenarios

Why this section exists

Single-target price models hide the uncertainty. They look authoritative but they collapse a real distribution of outcomes into one number. Scenarios force the same uncertainty out into the open: the report has to say what could go right, what could go wrong, and how likely each path is.

Probabilities are deliberately rough. We don't pretend to know that the bull case is 27.4% likely. We round to broad bands so the reader weighs the case logic, not the decimals. The point is to make the trade-offs explicit, not to deliver a precision that isn't there.

What to look for

• •Whether the bull and bear drivers are concrete or hand-wavy
• •How wide the price ranges are - narrow ranges suggest a high-conviction read, wide ranges signal genuine uncertainty
• •Whether your own assumptions match the base case or one of the tails
• •Which catalysts would shift the probabilities

How we build it

The model writes the bear case first. This is on purpose. It's much easier to sell yourself a bull case after you've already decided you like the company, so we force the bear path to be written before the bull. The base case follows from the most likely combination of evidence in the scorecard, transcripts, and recent filings.

Probabilities are not pulled from a backtest - they are the model's read of how strong the underlying drivers are, anchored in the report's primary sources. Two reports of the same company on different dates can produce different probabilities because new earnings calls and filings genuinely change what's likely.

Primary sources

Scenarios draw on the same four sources as the rest of the report. The bull and bear drivers in particular have to point at concrete evidence.

• Descriptive sections of recent SEC filings

  Business description, segment and geographic tables, and risk factors. The base case is anchored here; the tails extend from what the company itself describes as upside or downside.

• Earnings call transcripts

  Forward-looking commentary, guidance changes, and the texture of how management answers questions about catalysts. Often the bull and bear drivers are visible here before they show up in a filing.

• Third-party analyses

  Useful as a sanity check on probability ranges. Where a third-party view sharply disagrees with the model's read, the section flags the divergence rather than averaging it away.

• Targeted web search

  Used to verify specific catalysts - regulatory dates, court schedules, industry events - that affect when a scenario could realistically resolve.

How to read it

Don't fixate on the headline probabilities. Read the drivers under each scenario and ask whether you find them plausible. If you can name an additional risk that isn't in the bear case, the report is incomplete for you and you should weight the bear case higher than the model did.

Use the price ranges as anchors, not targets. A tight cluster of base-case ranges around the current price means the market is roughly fairly pricing the most likely path; wide gaps in either direction mean someone - the market or our read - is going to turn out wrong.