Look Under The Hood: XOP Has 40% Upside
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 SPDR S&P Oil & Gas Exploration & Production ETF (Symbol: XOP), we found that the implied analyst target price for the ETF based upon its underlying holdings is $48.49 per unit.
With XOP trading at a recent price near $34.69 per unit, that means that analysts see 39.78% upside for this ETF looking through to the average analyst targets of the underlying holdings. Three of XOP's underlying holdings with notable upside to their analyst target prices are Carrizo Oil & Gas, Inc. (Symbol: CRZO), Whiting Petroleum Corp (Symbol: WLL), and Noble Energy Inc (Symbol: NBL). Although CRZO has traded at a recent price of $25.49/share, the average analyst target is 79.84% higher at $45.84/share. Similarly, WLL has 59.68% upside from the recent share price of $8.32 if the average analyst target price of $13.29/share is reached, and analysts on average are expecting NBL to reach a target price of $45.68/share, which is 51.37% above the recent price of $30.18. Below is a twelve month price history chart comparing the stock performance of CRZO, WLL, and NBL:
Combined, CRZO, WLL, and NBL represent 5.28% of the SPDR S&P Oil & Gas Exploration & Production ETF. Below is a summary table of the current analyst target prices discussed above:
Avg. Analyst 12-Mo. Target
% Upside to Target
SPDR S&P Oil & Gas Exploration & Production ETF
Carrizo Oil & Gas, Inc.
Whiting Petroleum Corp
Noble Energy Inc
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.