The S&P 500 (INDEXSP:.INX) index is expected to increase over the near-term, according to a report from Fact Set based on the predictions of industry analysts and market strategists.
The S&P 500 reached as high as 2011.36 points on September 18. The index ended that third-quarter at 1,972.29 points, up by 1.9%.
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Early last month, Morgan Stanley forecast that the S&P 500 could reach as 3,000 points “should the U.S. expansion prove to have four or five years left to it.”
Over the past several days, the U.S. stock markets including the S&P 500 index suffered decline due to investors’ concern regarding the economic data and geopolitical conflicts in Ukraine, the Middle East and Hong Kong.
Amid the different concerns, industry analysts and market strategist believe that the value of the S&P 500 index would go up over the near-term. However, the analysts have different forecast regarding that rate of the increase.
Industry analysts predict S&P 500 to climb 10.5%
Industry analysts estimated that the S&P 500 (INDEXSP:.INX) will increase an aggregate of 10.5% over the near term. They based their forecast on the difference between the bottom-up target price and closing price of the index on September 30.
The bottom-up target price for the S&P 500 is 2,179.01 points (combining the mean target price estimates for all the companies listed in the index) based on the company level estimates submitted by industry analysts, according to FactSet.
The 2,179.01 points bottom-up target price is 10.5% higher than the 1972.29 points closing price of the S&P 500 by the end of the third-quarter.
Market strategists predict S&P 500 to up 4.3%
On the other hand, market strategists expected the S&P 500 to rise by 4.3% over the near-term. They based their estimate on the difference between the top-down mean target price and the closing price of the index on September 30.
According to FactSet, top-down mean target price for the S&P 500 (INDEXSP:.INX) is 2,056.50 points by getting the average of the six index-level target price estimates submitted by the market strategist.
The 2,056.50 points top-down mean target price is 4.3% above the 1972.29 closing price of the S&P 500 by the end of the third-quarter.
FactSet noted that the both industry analysts and market strategist underestimated the actual value of the S&P 500 over the past year.
“Comparing a 1-year lagged bottom-up EPS estimate to the closing month-end value of the index over the past 12 months, the bottom-up EPS estimate has underestimated the closing value of the index by 9.2% on average during the past year,” according to FactSet.
The firm added, “Comparing a 1-year lagged top-down mean EPS estimate to the closing month-end value of the index over the past 12 months, the top-down mean EPS estimate has underestimated the closing value of the index by 16.4% on average during the past year.”
As always caveat emptor.