During the second quarter (March 31 to June 30), the value of the S&P 500 increased by 20% (to 3100.29 from 2584.59). 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 6.3% 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 July 9. 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 July 9, the bottom up target price for the S&P 500 was 3351.81, which was 6.3% above the closing price of 3152.05.
Insight/2020/07.2020/07.13.2020_TOW2/S%26P%20500%20Bottom%20Up%20Target%20Price%20vs%20Closing%20Price.png)
At the sector level, the Energy (+24.5%) and Financials (+16.8%) 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 July 9. On the other hand, the Consumer Discretionary (-0.5%) and Information Technology (-0.5%) sectors are expected to see the largest price decreases, as these sectors had the largest downside differences between the bottom-up target price and the closing price on July 9.
Insight/2020/07.2020/07.13.2020_TOW2/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 July 9) can be found in the tables below.
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 3.6% on average over the past five years (using month-end values), by 2.7% on average over the past 10 years (using month-end values), and by 9.7% on average over the past 15 years (using month-end values).
S&P 500: Difference Between Median Target Price & Closing Price: Top 10 (Source: FactSet)
|
Company
|
Target
|
Closing
|
Diff ($)
|
Diff (%)
|
|
Devon Energy Corporation
|
16.00
|
9.80
|
6.20
|
63.3%
|
|
TechnipFMC Plc
|
11.00
|
6.81
|
4.19
|
61.5%
|
|
Concho Resources Inc.
|
73.50
|
47.56
|
25.94
|
54.5%
|
|
H&R Block, Inc.
|
20.00
|
13.15
|
6.85
|
52.1%
|
|
Discovery, Inc. Class C
|
26.00
|
17.25
|
8.75
|
50.7%
|
|
Noble Energy, Inc.
|
13.00
|
8.64
|
4.36
|
50.5%
|
|
L3Harris Technologies Inc
|
239.00
|
159.80
|
79.20
|
49.6%
|
|
Assurant, Inc.
|
145.00
|
97.56
|
47.44
|
48.6%
|
|
Universal Health Services, Inc. Cl B
|
130.00
|
88.61
|
41.39
|
46.7%
|
|
Diamondback Energy, Inc.
|
55.00
|
37.50
|
17.50
|
46.7%
|
S&P 500: Difference Between Median Target Price & Closing Price: Bottom 10 (Source: FactSet)
|
Company
|
Target
|
Closing
|
Diff ($)
|
Diff (%)
|
|
Paycom Software, Inc.
|
245.00
|
314.01
|
-69.01
|
-22.0%
|
|
Old Dominion Freight Line, Inc.
|
140.00
|
176.42
|
-36.42
|
-20.6%
|
|
Clorox Company
|
188.00
|
229.50
|
-41.50
|
-18.1%
|
|
Twitter, Inc.
|
29.50
|
35.72
|
-6.22
|
-17.4%
|
|
Rollins, Inc.
|
38.00
|
45.79
|
-7.79
|
-17.0%
|
|
ABIOMED, Inc.
|
225.00
|
265.68
|
-40.68
|
-15.3%
|
|
West Pharmaceutical Services
|
200.00
|
235.93
|
-35.93
|
-15.2%
|
|
Fortinet, Inc.
|
127.00
|
149.60
|
-22.60
|
-15.1%
|
|
Newell Brands Inc
|
13.00
|
15.01
|
-2.01
|
-13.4%
|
|
eBay Inc.
|
52.00
|
59.22
|
-7.22
|
-12.2%
|
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