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 First Trust NASDAQ-100 Ex-Technology Sector Index Fund ETF (Symbol: QQXT), we found that the implied analyst target price for the ETF based upon its underlying holdings is $58.46 per unit.
With QQXT trading at a recent price near $53.14 per unit, that means that analysts see 10.02% upside for this ETF looking through to the average analyst targets of the underlying holdings. Three of QQXT's underlying holdings with notable upside to their analyst target prices are Take-Two Interactive Software, Inc. (Symbol: TTWO), Vertex Pharmaceuticals, Inc. (Symbol: VRTX), and Monster Beverage Corp (Symbol: MNST). Although TTWO has traded at a recent price of $89.74/share, the average analyst target is 44.03% higher at $129.25/share. Similarly, VRTX has 23.86% upside from the recent share price of $166.97 if the average analyst target price of $206.81/share is reached, and analysts on average are expecting MNST to reach a target price of $63.46/share, which is 15.61% above the recent price of $54.89. Below is a twelve month price history chart comparing the stock performance of TTWO, VRTX, and MNST:
Below is a summary table of the current analyst target prices discussed above:
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.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.