LLooking at the underlying ETF holdings in our coverage universe on ETF Channel, we compared the trading price of each holding to the 12-month futures analyst average target price, and calculated the weighted average implied analyst target price. for the ETF itself. For the Energy Income ETF (ticker: EINC), we found that the analysts’ implied target price for the ETF, based on its underlying holdings, is $71.23 per share.
With EINC trading at a recent price close to $63.81 per share, this means analysts see an 11.62% upside potential for this ETF when factoring in the average analyst targets of the underlying holdings. Genesis Energy LP (ticker: GEL), DCP Midstream LP (ticker: DCP) and TC Energy Corp (ticker: TRP) are three of EINC’s underlying holdings with a notable advantage over their analyst target prices. Although GEL traded at a recent price of $10.50/share, the average analyst target is 25.71% higher at $13.20/share. Similarly, DCP is up 21.63% from the recent price of $34.84 if the average analyst target price of $42.38/share is reached, and analysts on average expect TRP hits a target price of $56.69/share, 12.76% above the recent price of $50.27. Below is a 12 month price history chart comparing the performance of GEL, DCP and TRP stocks:
Together, GEL, DCP and TRP represent 8.66% of the Energy Income ETF. Below is a table summarizing the current target prices of the analysts mentioned above:
|Last name||Symbol||Recent Price||Avg. 12-MB Analyst. Target||% increase over target|
|Energy Income ETFs||EINC||$63.81||$71.23||11.62%|
|Genesis Energy LP||FREEZE||$10.50||$13.20||25.71%|
|DCP Midstream LP||PCD||$34.84||$42.38||21.63%|
|TC Energy Corp||TRP||$50.27||$56.69||12.76%|
Are analysts justified in these targets, or too optimistic about where these stocks will trade in 12 months? Do the analysts have a valid rationale for their goals, or are they lagging behind recent company and industry developments? A high price target relative to a stock’s price can reflect optimism about the future, but can also be a precursor to target price declines if targets were a relic of the past. These are questions that require further research from investors.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.