Industry Analysts Predict the S&P 500 Will Close Above 6,600 in 2025

With 2024 coming to a close, analysts are making predictions for the closing price of the S&P 500 for next year. Where do industry analysts (using a bottom-up approach) believe the S&P 500 will close at the end of 2025?

Industry analysts in aggregate predict the S&P 500 will have a closing price of 6,678.18 in 12 months. This bottom-up target price for the index is calculated by aggregating the median target price estimates (based on the company-level target prices submitted by industry analysts) for all the companies in the index. On December 11, the bottom-up target price for the S&P 500 was 6,678.18, which was 9.8% above the closing price of 6,084.19.

At the sector level, the Health Care (+19.7%), Materials (+16.8%), and Energy (+16.7%) sectors are expected to see the largest price increases, as these sectors have the largest upside differences between the bottom-up target price and the closing price. On the other hand, the Consumer Discretionary (-3.3%) sector is expected to see the largest price decrease, as this sector has the largest downside difference between the bottom-up target price and the closing price.

At the company level, the ten stocks in the S&P 500 with the largest upside and downside differences between their median target price and closing price (on December 11) can be found below.

How accurate is the bottom-up target price at the start of the year?

At the end of last year (December 31, 2023), the bottom-up target price for the S&P 500 was 5,131.92. Based on yesterday’s closing price of 6,084.19, industry analysts underestimated the price of the index by 15.7% at the start of CY 2024.

However, it is important to note that industry analysts have historically overestimated the closing price of the index at the start of the year.

Over the previous 20 years (2004 – 2023), the average difference between the bottom-up target price estimate at the beginning of the year (December 31) and the final price for the index for that same year has been 6.9%. In other words, industry analysts on average have overestimated the final price of the index by 6.9% one year in advance during the previous 20 years. Analysts overestimated the final value (the final value finished below the estimate) in 13 of the 20 years and underestimated the final value (the final value finished above the estimate) in the other 7 years. It is interesting to note that analysts have underestimated the final value in four of the past five years (2019 – 2023).

If one applies the average overestimation of 6.9% to the current bottom-up target price estimate (assuming the estimate changes little between now and December 31), the expected closing value for 2025 would be 6,215.94, which is 2.2% above yesterday’s closing price of 6,084.19.

Author’s Note: The FactSet Earnings Insight report is being published one day early on December 12. The next edition of the report will be published on Friday, December 20.

This blog post is for informational purposes only. The information contained in this blog post is not legal, tax, or investment advice. FactSet does not endorse or recommend any investments and assumes no liability for any consequence relating directly or indirectly to any action or inaction taken based on the information contained in this article.