Industry analysts forecast a more than 25% increase in the price of the S&P 500 over the next 12 months

With the price of the S&P 500 down 17% since March 31 and worries about a rising recession in recent weeks, where do industry analysts think the price of the index will go from here?

Overall, industry analysts expect the S&P 500 to see a price increase of 25.7% over the next twelve months. This percentage is based on the difference between the bottom-up target price and the closing price of the index on yesterday’s date (September 22). 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 companies in the index. On September 22, the upward target price of the S&P 500 was 4,724.28, or 25.7% above the closing price of 3,757.99.

After falling for six consecutive months, the ascending target price has stabilized over the past two months. From January 31 to July 29, the ascending target price decreased by 11.1% (from 5,319.28 to 4,727.51). From July 29 to September 22, the ascending target price remained in the 4,720-4,750 range.

At the sector level, the communication services (+37.6%), information technology (+31.3%) and real estate (+30.8%) sectors are expected to see the largest increases in revenue. price, with these three sectors having the largest upside gaps between the ascending target price and the closing price on September 22. In contrast, the Utilities (+10.3%) and Consumer Staples (+14.2%) sectors are expected to see the smallest price increases, with these two sectors having smaller upside differences between the price ascending target and the September 22 closing price.

At the company level, the ten S&P 500 stocks with the largest upside and downside differences between their median target price and their closing price (September 22) are shown below. Interestingly, only 12 S&P 500 stocks had a median target price below their September 22 closing price. Five of these twelve stocks belong to the consumer staples sector.

How accurately have industry analysts predicted the future value of the S&P 500?

Over the past few months, industry analysts have overstated the closing price by wide margins. As of September 30, 2021, the ascending target price was 5,049.43. Almost a year later (September 22, 2022), the closing price of the S&P 500 was 3,757.99. Based on yesterday’s closing price, industry analysts overestimated the end of September 2022 closing price by around 34% almost a year ago.

Over the past five to ten years, industry analysts have averaged within 1% of the index’s closing price 12 months out. Over the past five years, industry analysts have underestimated the index price by an average of 0.7% (using month-end values). Over the past ten years, industry analysts have overestimated the index price by an average of 0.1% (using month-end values).

Over longer periods, analysts have generally overestimated the closing price 12 months later. Over the past fifteen years, industry analysts have overestimated the price of the index by an average of 8.2% (using end-of-month values). Over the past twenty years, industry analysts have overestimated the index price by an average of 9.7% (using end-of-month values).

sp500-target-price-ascending-vs-closing-price

S&P 500: Difference between median target price and closing price: Top 10 (Source: FactSet)

Company

Target

Closing

Difference ($)

Difference (%)

DISH Network Corporation Class A

32.00

15.67

4:33 p.m.

104.2%

Generac Management Inc.

345.00

171.08

173.92

101.7%

Caesars Entertainment Inc

72.00

37.62

34.38

91.4%

MGM Resorts International

55.00

30.61

24:39

79.7%

Warner Bros. Disc., Inc. Series A

9:00 p.m.

12.01

8.99

74.9%

Advanced Micro Devices, Inc.

120.00

69.50

50.50

72.7%

News Corporation Class A

26.70

15.69

11.01

70.2%

Bio-Rad Laboratories, Inc. Class A

700.00

418.55

281.45

67.2%

Bio-Techne Corporation

480.00

290.22

189.78

65.4%

Align Technology, Inc.

360.00

217.95

142.05

65.2%

S&P 500: Difference between the median target price and the closing price: the last 10 (Source: FactSet)

Company

Target

Closing

Difference ($)

Difference (%)

Clorox Company

130.00

141.28

-11.28

-8.0%

Consolidated Edison, Inc.

89.00

96.42

-7.42

-7.7%

Pinnacle West Capital Corp.

69.00

72.70

-3.70

-5.1%

GeneralMills, Inc.

77.00

80.78

-3.78

-4.7%

Genuine Parts Company

150.00

154.32

-4.32

-2.8%

Campbell Soup Company

48.00

49.18

-1.18

-2.4%

progressive society

121.00

122.42

-1.42

-1.2%

Twitter, Inc.

41.00

41.40

-0.40

-1.0%

Netflix, Inc.

235.00

237.05

-2.05

-0.9%

Principal Financial Group, Inc.

75.00

75.42

-0.42

-0.6%


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

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