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Industry Analysts Project 8% Price Increase for S&P 500 Over the Next 12 Months

Companies and Earnings

By John Butters  |  April 5, 2019

During the first quarter, the S&P 500 index recorded an increase in value of 13.1%, which was the largest quarterly increase since Q3 2009 (+15.0%). 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 7.5% increase in price 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 (April 4). 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 4, the bottom-up target price for the S&P 500 was 3096.66, which was 7.5% above the closing price of 2879.39.

 bottom-up-target-price

At the sector level, the Energy (+13.5%) and Health Care (+11.7%), 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 4. On the other hand, the Real Estate (+1.4%) and Utilities (+2.4%) sectors are expected to see the smallest price increases, as these sectors had the smallest upside differences between the bottom-up target price and the closing price on April 4.

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 4) are listed below.

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

Company

Target

Closing

Diff ($)

Diff (%)

Nektar Therapeutics

74.00

35.29

38.71

109.7%

Jefferies Financial Group Inc.

31.00

19.89

11.11

55.9%

ABIOMED, Inc.

435.00

282.87

152.13

53.8%

Cigna Corporation

245.00

161.48

83.52

51.7%

Diamondback Energy, Inc.

148.00

99.84

48.16

48.2%

Anadarko Petroleum Corporation

66.50

45.06

21.44

47.6%

Centene Corporation

79.00

53.56

25.44

47.5%

Marathon Petroleum Corporation

90.00

61.35

28.65

46.7%

Concho Resources Inc.

153.00

109.21

43.79

40.1%

CVS Health Corporation

73.00

53.40

19.60

36.7%

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

Company

Target

Closing

Diff ($)

Diff (%)

Advanced Micro Devices, Inc.

24.00

29.09

-5.09

-17.5%

Franklin Resources, Inc.

29.00

34.44

-5.44

-15.8%

Chipotle Mexican Grill, Inc.

600.00

703.38

-103.38

-14.7%

Xilinx, Inc.

110.00

127.82

-17.82

-13.9%

Waters Corporation

215.00

248.36

-33.36

-13.4%

Garmin Ltd.

77.00

88.20

-11.20

-12.7%

Fastenal Company

58.00

66.32

-8.32

-12.5%

Mettler-Toledo International Inc.

638.00

727.20

-89.20

-12.3%

Seagate Technology PLC

43.50

49.22

-5.72

-11.6%

Kimberly-Clark Corporation

108.00

121.99

-13.99

-11.5%

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

Analysts have typically overestimated the future closing price of the S&P 500. Over the past five years, the average difference between the bottom-up target price estimate at the end of the month and the closing price 12 months later has been 1.5%. Over the past 10 years, the average difference between the bottom-up target price estimate at the end of the month and the closing price 12 months later has been 5.1%. Over the past 15 years, the average difference between the bottom-up target price estimate at the end of the month and the closing price 12 months later has been 9.6%. In other words, industry analysts have overestimated the price of the index by 1.5% on average over the past five years (using month-end values), by 5.1% on average over the past 10 years, and by 9.6% on average over the past 15 years.

bottom-up-target-price-close-price

Download the latest Earnings Insight

John Butters

Senior Earnings Analyst

John’s 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, Financial Times, The New York Times, MarketWatch, and Yahoo! Finance.

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