ILooking at the underlying holdings of ETFs in our hedging universe at ETF channel, we compared each position’s trade price to the 12-month futures analyst average target price and calculated the analyst weighted average implied target price for the ETF itself. For the iShares Russell 1000 Value ETF (ticker: IWD), we found that the analysts’ implied target price for the ETF based on its underlying holdings is $188.68 per share.
With IWD trading at a recent price close to $160.20 per share, this means analysts see upside potential of 17.78% for this ETF when factoring in the average analyst targets of the underlying holdings. Three of IWD’s underlying holdings with a notable advantage over their analyst target prices are (Symbol: AMBP), Harley-Davidson Inc (Symbol: HOG) and Wex Inc (Symbol: WEX). Although AMBP traded at a recent price of $8.92/share, the average analyst target is 38.69% higher at $12.37/share. Similarly, HOG is up 24.88% from the recent price of $40.68 if the average analyst target price of $50.80/share is reached, and analysts on average expect WEX hits a target price of $204.11/share, 24.59% above the recent price of $163.83. Below is a 12 month price history chart comparing the performance of AMBP, HOG and WEX stocks:
Below is a table summarizing the current target prices of the analysts mentioned above:
| name | symbol | Recent Price | Avg. 12-MB Analyst. Target | % increase over target |
|---|---|---|---|---|
| iShares Russell 1000 Value ETF | IWD | $160.20 | $188.68 | 17.78% |
| AMBP | $8.92 | $12.37 | 38.69% | |
| Harley-Davidson Inc. | PORK | $40.68 | $50.80 | 24.88% |
| Wex Inc. | WEX | $163.83 | $204.11 | 24.59% |
Are analysts justified in these targets, or too optimistic about where these stocks will trade in 12 months? Do the analysts have a valid rationale for their goals, or are they lagging behind recent company and industry developments? A high price target relative to a stock’s price can reflect optimism about the future, but can also be a precursor to target price declines if targets were a relic of the past. These are questions that require further research from investors.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.