Look under the hood: EINC up 12%

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:

Table of relative performance GEL, DCP and TRP

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.

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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.


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