As we scrutinize the composition of ETFs within our coverage realm on ETF Channel, a noteworthy revelation emerges. By juxtaposing the trading price of each holding against the average analyst 12-month forward target price, we can deduce the weighted average implied analyst target price for the ETF itself. Take, for instance, the iShares S&P Small-Cap 600 Growth ETF (Symbol: IJT), where the implied analyst target price based on its underlying holdings stands at $140.27 per unit.
At its recent trading price of approximately $128.06 per unit, IJT hints at a potential gain of 9.54% according to analysts looking through the prism of the average analyst targets of the underlying holdings. Noteworthy constituents like Corcept Therapeutics Inc (Symbol: CORT), Gogo Inc (Symbol: GOGO), and Vicor Corp (Symbol: VICR) are particularly intriguing. CORT, for instance, stands at $24.50 per share presently, yet the average analyst target soars 74.69% higher to $42.80 per share. Similarly, GOGO boasts a 57.65% upside from its recent share price of $8.50 if it reaches the average analyst target price of $13.40 per share. VICR, with a recent price of $38.04, is anticipated to hit a target price of $57.50 per share, indicating a substantial 51.16% increase. A comparison of the stock performance of CORT, GOGO, and VICR over the past twelve months is depicted in the chart below:
For a concise overview, the table below summarizes the current analyst target prices discussed above:
| Name | Symbol | Recent Price | Avg. Analyst 12-Mo. Target | % Upside to Target |
|---|---|---|---|---|
| iShares S&P Small-Cap 600 Growth ETF | IJT | $128.06 | $140.27 | 9.54% |
| Corcept Therapeutics Inc | CORT | $24.50 | $42.80 | 74.69% |
| Gogo Inc | GOGO | $8.50 | $13.40 | 57.65% |
| Vicor Corp | VICR | $38.04 | $57.50 | 51.16% |
Are analysts’ projections founded on solid ground, or are they harbouring overly optimistic sentiments about the future trading prices of these stocks in the span of 12 months? It beckons further reflection. An exorbitant price target relative to a stock’s current trading price may signal robust faith in the future, yet it also risks becoming a relic of the past, leading to potential target price downgrades. These are ponderous considerations warranting diligent investor scrutiny.
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The views and opinions expressed herein represent the author’s stance and do not necessarily mirror those of Nasdaq, Inc.
