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.
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.
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.
|
Company |
Target |
Closing |
Diff ($) |
Diff (%) |
|
Norwegian Cruise Line Holdings |
30.00 |
11.72 |
18.28 |
156.0% |
|
Carnival Corporation |
30.50 |
11.99 |
18.51 |
154.4% |
|
DXC Technology Co. |
35.00 |
15.80 |
19.20 |
121.5% |
|
MGM Resorts International |
31.00 |
15.00 |
16.00 |
106.7% |
|
American International Group |
49.50 |
24.13 |
25.37 |
105.1% |
|
Kimco Realty Corporation |
19.50 |
9.63 |
9.87 |
102.5% |
|
Simon Property Group, Inc. |
125.00 |
62.91 |
62.09 |
98.7% |
|
Marathon Petroleum Corporation |
46.00 |
24.31 |
21.69 |
89.2% |
|
Xerox Holdings Corporation |
36.00 |
19.26 |
16.74 |
86.9% |
|
United Airlines Holdings, Inc. |
51.00 |
27.51 |
23.49 |
85.4% |
|
Company |
Target |
Closing |
Diff ($) |
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%).