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.
Insight/2020/10.2020/10.05.2020_TOW/S%26P%20500%20Bottom%20Up%20Target%20Price%20vs%20Closing%20Price.png)
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.
Insight/2020/10.2020/10.05.2020_TOW/S%26P%20500%20Sector%20Level%20Bottom%20Up%20Target%20Price%20vs%20Closing%20Price.png)
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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