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Industry Analysts Predict S&P 500 Will See a 12% Price Increase in the Next 12 Months

Earnings

By John Butters  |  October 5, 2020

During the third quarter (June 30 to September 30), the value of the S&P 500 increased by 8.5% (to 3363.00 from 3100.29). 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 a price increase of 11.6% over the next 12 months. This percentage is based on the difference between the bottom-up target price and the closing price for the index as of October 1. 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 1, the bottom-up target price for the S&P 500 was 3774.44, which was 11.6% above the closing price of 3380.80.

S&P 500 Bottom Up Target Price vs Closing Price

At the sector level, the Energy (+45.9%) 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 1. On the other hand, the Consumer Staples (+7.3%) 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 October 1.

S&P 500 Sector Level Bottom Up Target Price vs Closing Price

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 1) can be found in the tables below. It is interesting to note that the 10 S&P 500 stocks expected to see the largest price increases are all in the Energy sector.

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

Company

Target

Closing

Diff ($)

Diff (%)

Diamondback Energy, Inc.

55.00

29.09

25.91

89.1%

EOG Resources, Inc.

64.00

34.86

29.14

83.6%

Apache Corporation

17.00

9.31

7.69

82.6%

Devon Energy Corporation

16.00

9.10

6.90

75.8%

TechnipFMC Plc

11.00

6.27

4.73

75.4%

HollyFrontier Corporation

32.50

18.94

13.56

71.6%

Valero Energy Corporation

68.00

40.28

27.72

68.8%

Concho Resources Inc.

70.00

42.35

27.65

65.3%

Marathon Oil Corporation

6.50

3.95

2.55

64.6%

Schlumberger NV

24.50

15.01

9.49

63.2%

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

Company

Target

Closing

Diff ($)

Diff (%)

American Airlines Group, Inc.

10.00

12.58

-2.58

-20.5%

Twitter, Inc.

38.50

46.70

-8.20

-17.6%

Under Armour, Inc. Class A

10.50

11.86

-1.36

-11.5%

West Pharmaceutical Services, Inc.

245.00

275.79

-30.79

-11.2%

Rollins, Inc.

48.00

53.81

-5.81

-10.8%

MGM Resorts International

19.50

21.82

-2.32

-10.6%

Whirlpool Corporation

165.00

183.19

-18.19

-9.9%

Public Storage

204.00

226.26

-22.26

-9.8%

Mettler-Toledo International Inc.

880.00

970.92

-90.92

-9.4%

Expeditors Intl. of Washington, Inc.

81.00

89.29

-8.29

-9.3%

How accurate have the industry analysts been in predicting the future value of the S&P 500? Industry analysts have overestimated the price of the index by 3.0% on average over the past five years (using month-end values), by 2.5% on average over the past 10 years (using month-end values), and by 9.5% on average over the past 15 years (using month-end values).

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John Butters

Vice President, Senior Earnings Analyst, Investor Relations

Mr. John Butters is Vice President and Senior Earnings Analyst at FactSet. His 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, The Financial Times, The New York Times, MarketWatch, and Yahoo! Finance. Mr. Butters has over 15 years of experience in the financial services industry. Prior to FactSet in January 2011, he worked for more than 10 years at Thomson Reuters (Thomson Financial), most recently as Director of U.S. Earnings Research (2007-2010).

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