Stock prices are affected by expectations of the buyers in the market. One of the places those expectations come from is guidance about future results issued by companies themselves.

Guidance is not required. If companies are going to provide expectations for things like future sales and earnings, they usually do it in their quarterly earnings releases and in their conference calls.

I find that as you compare guidance to earnings results quarter after quarter, you can start to get a better sense of how to use the information to make your own projections. Some companies always seem to issue very conservative guidance. (Apple is one of these). For others, it is generally more optimistic. Management is required to make "reasonable" predictions so I think they are often a bit more conservative. I certainly find they are often more conservative than the projections the analysts are making.

Here's an interesting post on issuing guidance from the perspective of John Palizza who spent many years working in investor relations at such companies as Sysco (SYY) and Walgreens(WAG)

Guidance-Can't Live With It, Can't Live Without It



Laurie Frederiksen
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