With 2025 coming to a close, market strategists (typically using a top-down approach) are making predictions for the closing price of the S&P 500 for next year.
Where do industry analysts (using a bottom-up approach) believe the S&P 500 will close at the end of 2026?
Industry analysts in aggregate predict the S&P 500 will have a closing price of 7,968.78 in 12 months. This bottom-up target price for the index is calculated by aggregating the median target price estimates (based on the company-level target prices submitted by industry analysts) for all the companies in the index. On December 11, the bottom-up target price for the S&P 500 was 7,968.78, which was 15.5% above the closing price of 6,901.00.
At the sector level, the Information Technology (+19.8%) sector is expected to see the largest price increase, as this sector has the largest upside difference between the bottom-up target price and the closing price. On the other hand, the Financials (+8.3%) sector is expected to see the smallest price increase, as this sector has the smallest upside difference between the bottom-up target price and the closing price.
At the company level, the ten stocks (with a minimum of 3 target prices) in the S&P 500 with the largest upside and downside differences between their median target price and closing price (on December 11) are featured below and on page 4 of the Earnings Insight report.
How accurate is the bottom-up target price at the start of the year?
At the end of last year (December 31, 2024), the bottom-up target price for the S&P 500 was 6,728.40. Based on yesterday’s closing price of 6,901.00, analysts underestimated the price of the index by 2.5% at the start of CY 2025 as of yesterday.
However, it is important to note that industry analysts have historically overestimated the closing price of the index at the start of the year.
Over the previous 20 years (2005 – 2024), the average difference between the bottom-up target price estimate at the beginning of the year (December 31) and the final price for the index for that same year has been 5.9%. In other words, industry analysts on average have overestimated the final price of the index by about 5.9% one year in advance during the previous 20 years. Analysts overestimated the final value (the final value finished below the estimate) in 11 of the 20 years and underestimated the final value (the final value finished above the estimate) in the other 9 years. It is interesting to note that analysts have underestimated the final value in five of the past six years (2019 – 2024).
If one applies the average overestimation of 5.9% to the current bottom-up target price estimate (assuming the estimate changes little between now and December 31), the expected closing value for 2026 would be 7,501.28, which is 8.7% above yesterday’s closing price of 6,901.00.
*Actual for CY25 and Target (Start of Year) for CY26 reflect values as of Dec. 11
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