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Analysts Expect 11% Gains Ahead For The Communication Services Select Sector SPDR Fund ETF

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Getty

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 Communication Services Select Sector SPDR Fund ETF, we found that the implied analyst target price for the ETF based upon its underlying holdings is $55.47 per unit.

With XLC trading at a recent price near $50.07 per unit, that means that analysts see 10.79% upside for this ETF looking through to the average analyst targets of the underlying holdings. Three of XLC’s underlying holdings with notable upside to their analyst target prices are Discovery, News Corp, and Alphabet. Although DISCA has traded at a recent price of $30.90/share, the average analyst target is 15.64% higher at $35.73/share. Similarly, NWS has 12.09% upside from the recent share price of $12.49 if the average analyst target price of $14.00/share is reached, and analysts on average are expecting GOOGL to reach a target price of $1340.79/share, which is 11.83% above the recent price of $1198.96.

Combined, DISCA, NWS, and GOOGL represent 11.68% of the Communication Services Select Sector SPDR Fund ETF. 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
Communication Services Select Sector SPDR Fund ETF XLC $50.07 $55.47 10.79%
Discovery Inc DISCA $30.90 $35.73 15.64%
News Corp NWS $12.49 $14.00 12.09%
Alphabet Inc GOOGL $1198.96 $1340.79 11.83%

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.

Click here to find out 10 ETFs With Most Upside To Analyst Targets »

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