With investors, or maybe just the media more specifically, intensely focused on when the Dow Jones Industrial Average (DJIA) will finally break above 20,000, we wanted to see how analyst price targets for the 30 components of the index compare to current prices. Additionally, if each of the stocks in the index traded up to their respective consensus target, where would the index trade? Obviously, this is purely a theoretical exercise as not a lot of weight is put into specific price targets. That being said, where targets stand relative to current prices provides a gauge as to how bullish or bearish the analyst community is towards a specific stock, or in this case, the DJIA.
The table below lists each of the DJIA’s 30 components along with their consensus price target from the analyst community as well as how many points would be added to the index if the target was reached. With a consensus target of $182.95, analysts are expecting 13.3% upside for UnitedHealth (UNH). While three other stocks are expected see more upside based on their target prices in percentage terms, because of its higher share price and the fact that the index is price-weighted, if UNH rallies to its target price it would add nearly 150 points to the overall index. Behind UNH, the only other stock that would contribute more than 100 points to the DJIA if its target was reached would be Apple (AAPL), with analysts expecting 13.5% of upside. The stock that analysts are the most bullish on is NIKE (NKE). With a current target of $62.04, analysts expect nearly 20% upside from the stock, but because of its relatively low share price, that would translate to just under 70 DJIA points.
Analysts are usually tilted to the bullish side, but there are eight stocks in the DJIA where the consensus target is actually lower than the current price. At a level of $158.75, IBM’s consensus target is 5% below where it closed yesterday. Likewise, for Goldman (GS), it closed yesterday 2.2% above its consensus target. Ever since November, GS has been a big contributor to the DJIA’s gain, but if you put any weight into price targets, other stocks are going to have to start taking the lead in order for the DJIA to break above 20K.
Combining all the price targets for the 30 stocks, analyst price targets currently imply 913 points of upside for the DJIA relative to yesterday’s close, which would take the index up to 20,795 (a 4.6% gain). For a group that is usually associated with rose-colored glasses, analysts that cover the 30 stocks in the DJIA aren’t really all that bullish right now.
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