Industry Analysts Project 7% Increase in S&P 500 Price Over the Next 12 Months

After closing at a record-high value yesterday of 5,224.62, where do industry analysts believe the price of the S&P 500 will go from here?

Industry analysts in aggregate predict the S&P 500 will see a price increase of 7.0% over the next twelve months. This percentage is based on the difference between the bottom-up target price and the closing price for the index as of yesterday (March 20). 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 March 20, the bottom-up target price for the S&P 500 was 5,589.06, which was 7.0% above the closing price of 5,224.62.

At the sector level, the Health Care (+10.2%) and Real Estate (+10.0%) sectors are expected to see the largest price increases, as these two sectors had the largest upside differences between the bottom-up target price and the closing price on March 20. On the other hand, the Materials (+1.0%) and Industrials (+2.5%) sectors are expected to see the smallest price increases, as these two sectors had the smallest upside differences between the bottom-up target price and the closing price on March 20.

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 March 20) can be found below.

How accurate have the industry analysts been in predicting the future value of the S&P 500?

Historically, analysts have overestimated the (month-end) closing price of the index by about 3% to 8% on average over the past 20 years, depending on the time frame.

• Over the past five years, industry analysts have overestimated the price of the index by 4.6% on average (using month-end values).

• Over the past ten years, industry analysts have overestimated the price of the index by 2.9% on average (using month-end values).

• Over the past fifteen years, industry analysts have overestimated the price of the index by 5.4% on average (using month-end values).

• Over the past twenty years, industry analysts have overestimated the price of the index by 8.3% on average (using month-end values).

However, analysts have underestimated the closing price of the index for the past few months. On March 31, 2023, the bottom-up target price was 4,635.48. Nearly one year later (on March 20, 2024), the S&P 500 closing price was 5,224.62. Based on yesterday’s closing price, industry analysts underestimated the closing price at the end of March 2024 by about 11% nearly one-year ago.

The FactSet Earnings Insight report is being published one day early on March 21. The next edition of the report will also be published one day early on March 28.

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