Looking at the underlying holdings of the ETFs in our coverage universe at ETF Channel, we have compared the trading price of each holding against the average analyst 12-month forward target price, and computed the weighted average implied analyst target price for the ETF itself. For the Invesco S&P 500® Equal Weight ETF, we found that the implied analyst target price for the ETF based upon its underlying holdings is $114.90 per unit.
With RSP trading at a recent price near $103.94 per unit, that means that analysts see 10.55% upside for this ETF looking through to the average analyst targets of the underlying holdings. Three of RSP’s underlying holdings with notable upside to their analyst target prices are Snap-On, Mosaic, and BB&T. Although SNA has traded at a recent price of $163.87/share, the average analyst target is 14.73% higher at $188.00/share. Similarly, MOS has 12.94% upside from the recent share price of $27.98 if the average analyst target price of $31.60/share is reached, and analysts on average are expecting BBT to reach a target price of $57.75/share, which is 11.83% above the recent price of $51.64.
Below is a summary table of the current analyst target prices discussed above:
|Name||Symbol||Recent Price||Avg. Analyst 12-Mo. Target||% Upside to Target|
|Invesco S&P 500® Equal Weight ETF||RSP||$103.94||$114.90||10.55%|
Are analysts justified in these targets, or overly optimistic about where these stocks will be trading 12 months from now? Do the analysts have a valid justification for their targets, or are they behind the curve on recent company and industry developments? A high price target relative to a stock’s trading price can reflect optimism about the future, but can also be a precursor to target price downgrades if the targets were a relic of the past. These are questions that require further investor research.