The Math Shows EUSA Can Go To $65

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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 iShares MSCI USA Equal Weighted ETF (Symbol: EUSA), we found that the implied analyst target price for the ETF based upon its underlying holdings is $64.62 per unit.

With EUSA trading at a recent price near $58.21 per unit, that means that analysts see 11.00% upside for this ETF looking through to the average analyst targets of the underlying holdings. Three of EUSA's underlying holdings with notable upside to their analyst target prices are (Symbol: LBTYA), W.W. Grainger Inc. (Symbol: GWW), and AmerisourceBergen Corp. (Symbol: ABC). Although LBTYA has traded at a recent price of $25.96/share, the average analyst target is 28.08% higher at $33.25/share. Similarly, GWW has 14.50% upside from the recent share price of $276.46 if the average analyst target price of $316.54/share is reached, and analysts on average are expecting ABC to reach a target price of $88.40/share, which is 14.12% above the recent price of $77.46. Below is a twelve month price history chart comparing the stock performance of LBTYA, GWW, and ABC:

LBTYA, GWW, and ABC Relative Performance Chart

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
iShares MSCI USA Equal Weighted ETF EUSA $58.21 $64.62 11.00%
LBTYA $25.96 $33.25 28.08%
W.W. Grainger Inc. GWW $276.46 $316.54 14.50%
AmerisourceBergen Corp. ABC $77.46 $88.40 14.12%

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.

10 ETFs With Most Upside To Analyst Targets »

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Stocks , ETFs
Referenced Symbols: EUSA , LBTYA , GWW , ABC

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