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Industry analysts more optimistic than strategists on 2013 S&P 500 target prices

Jan 2, 2013

At the start of the new year, industry analysts and market strategists are far apart in terms of their target price predictions for the S&P 500 for 2013, with the industry analysts much more optimistic in their aggregate outlook than the market strategists.

S&P 500 Bottom-up Target Price vs. Top Down Mean Target Price: Forward 12 MonthsIndustry analysts in aggregate predict the S&P 500 will see a 12.5% increase in price in 2013. This percentage is based on the difference between the bottom-up target price and the closing price for the index at the end of 2012. Aggregating the mean target price estimates (based on company-level estimates submitted by industry analysts) for all 500 companies in the index, the bottom-up target price for the S&P 500 is 1603.96, which is 12.5% above the 2012 year-end price of 1426.19.

Market strategists on average predict the S&P 500 will see only a 1.8% increase in price in 2013. This percentage is based on the difference between the top down mean target price and the closing price for the index at the end of 2012. Taking the average of the six index-level target price estimates submitted to FactSet by market strategists, the top-down mean target price for the S&P 500 is 1452.50, which is only 1.8% above the 2012 year-end price of 1426.19.

It is interesting to note that one year ago, the industry analysts and market strategists were much closer in their target price predictions for the S&P 500 for 2012, and both groups were fairly accurate in their projections. At the end of 2011, the bottom-up target price (based on company-level estimates submitted by industry analysts) was 1453.46, and the top-down mean target price (based on index-level estimates submitted by market strategists) was 1450.00. Compared to the closing price of the S&P 500 at the end of 2012 of 1426.19, the industry analysts overestimated the price of the index by just 1.9% one year ago, while the market strategists overestimated the price of the index by just 1.7% one year
ago. 

Read more about the targets and ratings of companies in the S&P 500 in this month's edition of FactSet Targets & Ratings: US. Visit www.factset.com/targetsratings to launch the full report.

For more information on ratings and target data for companies in the MSCI Europe index, launch our report Targets & Ratings: Europe at www.factset.com/targetsratings_euro.

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