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Industry Analysts Predict the S&P 500 Will Close Above 3200 in the Next 12 Months

Earnings

By John Butters  |  April 9, 2020

From February 19 to March 23, the value of the S&P 500 decreased by 34% (to 2237.40 from 3386.15). Since March 23, the value of the S&P 500 has increased by 23% (to 2749.98 from 2237.40). 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 17.8% increase in price 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 April 8. 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 April 8, the bottom-up target price for the S&P 500 was 3238.62, which was 17.8% above the closing price of 2749.98.

S&P 500 Bottom Up Target Price vs Closing Price

At the sector level, the Communication Services (+23.3%) and Financials (+23.3%) sectors are expected to see the largest price increases, as these sectors had the largest upside differences between the bottom-up target price and the closing price on April 8. On the other hand, the Consumer Staples (+11.2%) 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 April 8.

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 April 8) can be found in the tables below.

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

Company

Target

Closing

Diff ($)

Diff (%)

Norwegian Cruise Line Holdings

30.00

11.72

18.28

156.0%

Carnival Corporation

30.50

11.99

18.51

154.4%

DXC Technology Co.

35.00

15.80

19.20

121.5%

MGM Resorts International

31.00

15.00

16.00

106.7%

American International Group

49.50

24.13

25.37

105.1%

Kimco Realty Corporation

19.50

9.63

9.87

102.5%

Simon Property Group, Inc.

125.00

62.91

62.09

98.7%

Marathon Petroleum Corporation

46.00

24.31

21.69

89.2%

Xerox Holdings Corporation

36.00

19.26

16.74

86.9%

United Airlines Holdings, Inc.

51.00

27.51

23.49

85.4%

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

Company

Target

Closing

Diff ($)

Diff (%)

Occidental Petroleum Corporation

13.00

15.56

-2.56

-16.5%

Clorox Company

162.00

181.04

-19.04

-10.5%

MarketAxess Holdings Inc.

356.50

395.62

-39.12

-9.9%

Illinois Tool Works Inc.

145.00

158.80

-13.80

-8.7%

McCormick & Company, Inc.

136.50

149.10

-12.60

-8.5%

Hormel Foods Corporation

43.50

47.37

-3.87

-8.2%

Citrix Systems, Inc.

135.00

146.82

-11.82

-8.1%

Waters Corporation

182.50

196.08

-13.58

-6.9%

Brown-Forman Corporation Cl. B

57.50

61.22

-3.72

-6.1%

Jack Henry & Associates, Inc.

161.50

169.38

-7.88

-4.7%

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 3.3% on average over the past five years (using month-end values), by 2.3% on average over the past 10 years, and by 9.8% on average over the past 15 years.

However, it is important to note that the bottom-up target price has declined by 11.3% since peaking at 3649.25 on February 26. It will be interesting to see if analysts continue to revise their target prices lower as S&P 500 companies report actual results for Q1 over the next few weeks. While industry analysts in aggregate are calling for a year-over-year decline in earnings for CY 2020 (-8.5%), they are also calling for double-digit growth in earnings in CY 2021 (+18.2%).

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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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