Remember: it is governing bodies who set the targets. Of course they need professional advice and all the statistical information they can get hold of, but in the end they must make a strategic judgment. I have found that many teachers are reluctant to attach percentages even to their most well-based hopes and if pressed to do so may play safe. Perhaps the prospect of performance-related pay increases this tendency. But we need better evidence than simply "This Year 11 isn't so good". There is no excuse now for predictions not backed by some objective evidence, since all the time the value-added information gets better. Your performance and assessment (PANDA) report is a valuable guide. In any case the purpose of a target is to put a little pressure on those who are to deliver it. That includes governors who, having arrived at what they think is attainable with effort, must support that effort through all the other things they do, and back it with their encouragement.
Incidentally, as the excellent new book mentioned below makes clear, target setting is a whole new approach to school performance covering more than exam results. Targets include inputs, process and outcomes, and cover literacy and numeracy, out-of-school activity, behaviour, attendance, staffing, communication, all aspects of school life.
Hot off the press is Target Setting for Tomorrow's Schools: A guide to whole school target- setting for governors and head- teachers by Nigel Gann (Falmer Press pound;13.95).