After closing at a record-high value on July 10 of 5,633.91, where do industry analysts believe the price of the S&P 500 will go from here?
Industry analysts in aggregate predict the S&P 500 will see a price increase of 7.6% over the next twelve months. This percentage is based on the difference between the bottom-up target price and the closing price for the index as of yesterday (July 11). The bottom-up target price is calculated by aggregating the median target price estimates (based on company-level estimates submitted by industry analysts) for all the companies in the index. On July 11, the bottom-up target price for the S&P 500 was 6,006.66, which was 7.6% above the closing price of 5,584.54.
At the sector level, the Energy (+17.5%) sector is expected to see the largest price increase, as this sector had the largest upside difference between the bottom-up target price and the closing price on July 11. On the other hand, the Information Technology (+4.2%) sector is expected to see the smallest price increase, as this sector had the smallest upside difference between the bottom-up target price and the closing price on July 11.
At the company level, the ten stocks in the S&P 500 with the largest upside and downside differences between their median target price and closing price (on July 11) can be found below.
How accurate have the industry analysts been in predicting the future value of the S&P 500?
Historically, analysts have overestimated the (month-end) closing price of the index by about 3% to 8% on average over the past 20 years, depending on the time frame. Over the past five years, industry analysts have overestimated the price of the index by 3.4% on average (using month-end values). Over the past ten years, industry analysts have overestimated the price of the index by 2.8% on average (using month-end values). Over the past fifteen years, industry analysts have overestimated the price of the index by 3.3% on average (using month-end values). Over the past twenty years, industry analysts have overestimated the price of the index by 8.2% on average (using month-end values).
However, it should be noted that analysts have underestimated the closing price of the index over the past eight months. On June 30, 2023, the bottom-up target price was 4,818.10. One year later (on June 28, 2024), the S&P 500 closing price was 5,460.48. Thus, industry analysts underestimated the closing price at the end of June 2024 by nearly 12% nearly one-year ago.
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