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Industry Analysts Predict a 13% Price Increase for the S&P 500

Earnings

By John Butters  |  October 14, 2019

The value of the S&P 500 has increased by 17.2% since the start of the year. Where do industry analysts believe the price of the index will go from here?

Industry analysts in aggregate predict the S&P 500 will see an 13.0% increase in price 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 October 10. 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 October 10, the bottom-up target price for the S&P 500 was 3321.32, which was 13.0% above the closing price of 2938.13.

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At the sector level, the Energy (+23.4%) 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 October 10. On the other hand, the Utilities (+2.0%) and Real Estate (+2.3%) sectors are expected to see the smallest price increases, as these sectors had the smallest upside differences between the bottom-up target price and the closing price on October 10.

At the company level, the 10 stocks in the S&P 500 with the largest upside and downside differences between their median target price and closing price (on October 10) can be found in the tables below. Six of the 10 companies expected to see the largest prices increases are in the Energy sector.

S&P 500: Difference Between Median Target Price & Closing Price: Top 10 (Source: FactSet)

Company

Target

Closing

Diff ($)

Diff (%)

DXC Technology Co.

48.00

26.59

21.41

80.5%

Diamondback Energy, Inc.

140.50

82.54

57.96

70.2%

Concho Resources Inc.

108.00

64.19

43.81

68.3%

Alexion Pharmaceuticals, Inc.

161.00

98.35

62.65

63.7%

Centene Corporation

69.00

44.09

24.91

56.5%

CBS Corporation Class B

58.00

37.66

20.34

54.0%

EOG Resources, Inc.

105.00

68.91

36.09

52.4%

Halliburton Company

28.00

18.43

9.57

51.9%

Marathon Oil Corporation

17.00

11.40

5.60

49.1%

Devon Energy Corporation

31.00

20.83

10.17

48.8%

S&P 500: Difference Between Median Target Price & Closing Price: Bottom 10 (Source: FactSet)

Company

Target

Closing

Diff ($)

Diff (%)

Garmin Ltd.

76.00

85.61

-9.61

-11.2%

Western Union Company

21.00

23.56

-2.56

-10.9%

Kimco Realty Corporation

18.75

20.54

-1.79

-8.7%

PulteGroup, Inc.

34.00

36.95

-2.95

-8.0%

Cincinnati Financial Corporation

107.00

116.23

-9.23

-7.9%

Hormel Foods Corporation

38.50

41.67

-3.17

-7.6%

Hershey Company

145.00

156.30

-11.30

-7.2%

Brown-Forman Corp. Class B

58.50

62.61

-4.11

-6.6%

McCormick & Company, Inc.

155.00

165.69

-10.69

-6.5%

MarketAxess Holdings Inc.

338.00

359.09

-21.09

-5.9%

How Accurate Have the Industry Analysts Been in Predicting the Future Value of the S&P 500?

Industry analysts have typically overestimated the future closing price of the S&P 500. Over the past five years, the average difference between the bottom-up target price estimate at the end of the month and the closing price 12 months later has been 2.8%. Over the past 10 years, the average difference between the bottom-up target price estimate at the end of the month and the closing price 12 months later has been 2.2%. Over the past 15 years, the average difference between the bottom-up target price estimate at the end of the month and the closing price 12 months later has been 9.9%. In other words, industry analysts have overestimated the price of the index by 2.8% on average over the past five years (using month-end values), by 2.2% on average over the past 10 years, and by 9.9% on average over the past 15 years.

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John Butters

Senior Earnings Analyst

John’s weekly research report, Earnings Insight provides analysis and commentary on trends in corporate earnings data for the S&P 500, including revisions to estimates, year-over-year growth, performance relative to expectations, and valuations. He is a widely used source for the media and has appeared on CNBC, Fox Business News, and the Business News Network. In addition, he has been cited by numerous print and online publications such as The Wall Street Journal, Financial Times, The New York Times, MarketWatch, and Yahoo! Finance.

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