The Math Shows PWV Can Go To $38

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 Invesco Dynamic Large Cap Value ETF (Symbol: PWV), we found that the implied analyst target price for the ETF based upon its underlying holdings is $38.44 per unit.

With PWV trading at a recent price near $34.31 per unit, that means that analysts see 12.04% upside for this ETF looking through to the average analyst targets of the underlying holdings. Three of PWV's underlying holdings with notable upside to their analyst target prices are AT&T Inc (Symbol: T), Prudential Financial Inc (Symbol: PRU), and Bristol-Myers Squibb Co. (Symbol: BMY). Although T has traded at a recent price of $29.62/share, the average analyst target is 14.98% higher at $34.06/share. Similarly, PRU has 12.96% upside from the recent share price of $64.43 if the average analyst target price of $72.78/share is reached, and analysts on average are expecting BMY to reach a target price of $66.70/share, which is 12.86% above the recent price of $59.10. Below is a twelve month price history chart comparing the stock performance of T, PRU, and BMY:

T, PRU, and BMY Relative Performance Chart

Combined, T, PRU, and BMY represent 7.88% of the Invesco Dynamic Large Cap Value 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
Invesco Dynamic Large Cap Value ETF PWV $34.31 $38.44 12.04%
AT&T Inc T $29.62 $34.06 14.98%
Prudential Financial Inc PRU $64.43 $72.78 12.96%
Bristol-Myers Squibb Co. BMY $59.10 $66.70 12.86%

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.

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