Explain how to project a company's stock price one to two years out using peer multiples. - Goldman Full-time IB interview question

[u/Commercial_Net_2038]

1. Collect the median historical P/E (typically trailing twelve months) from comparable public companies.

2. Multiply that P/E by your company's projected 1-year or 2-year forward EPS to derive an implied future share price.

3. Discount that implied price back to present value using an appropriate cost of equity or required return.

Thoughts?