The Online Investor

Peek Under The Hood: DON Has 21% Upside

By The Online Investor Staff, Tuesday, May 24, 7:19 AM ET

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 WisdomTree U.S. MidCap Dividend Fund ETF (NYSE:DON), we found that the implied analyst target price for the ETF based upon its underlying holdings is $50.58 per unit.

With DON trading at a recent price near $41.70 per unit, that means that analysts see 21.30% upside for this ETF looking through to the average analyst targets of the underlying holdings. Three of DON's underlying holdings with notable upside to their analyst target prices are Warner Music Group Corp (NASDAQ:WMG), John Bean Technologies Corp (NYSE:JBT), and Aramark (NYSE:ARMK). Although WMG has traded at a recent price of $29.19/share, the average analyst target is 37.38% higher at $40.10/share. Similarly, JBT has 24.27% upside from the recent share price of $113.46 if the average analyst target price of $141.00/share is reached, and analysts on average are expecting ARMK to reach a target price of $40.36/share, which is 23.62% above the recent price of $32.65. Below is a twelve month price history chart comparing the stock performance of WMG, JBT, and ARMK:

WMG, JBT, and ARMK Relative Performance Chart

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
WisdomTree U.S. MidCap Dividend Fund ETF DON $41.70 $50.58 21.30%
Warner Music Group Corp WMG $29.19 $40.10 37.38%
John Bean Technologies Corp JBT $113.46 $141.00 24.27%
Aramark ARMK $32.65 $40.36 23.62%

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.

The average analyst target price data upon which this article was based, is courtesy of data provided by Zacks Investment Research via Quandl.com.
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This Article's Word Cloud:   ARMK   Analyst   Aramark   Bean   Below   Corp   Dividend   ETFs   FREEGet   Fund   Group   John   MidCap   Music   NYSE   Target   Technologies   Upside   Warner   WisdomTree   With   Zacks   about   above   analyst   analysts   average   background   based   border   bottom   color   data   font   from   hctblstyle   holdings   latest   mdash   price   recent   report   research   share   target   targets   that   trading   underlying   upside

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