The Online Investor

The Math Shows IYF Can Go To $95

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 iShares U.S. Financials ETF (NYSE:IYF), we found that the implied analyst target price for the ETF based upon its underlying holdings is $94.97 per unit.

With IYF trading at a recent price near $75.14 per unit, that means that analysts see 26.39% upside for this ETF looking through to the average analyst targets of the underlying holdings. Three of IYF's underlying holdings with notable upside to their analyst target prices are Lemonade Inc (NYSE:LMND), TFS Financial Corp (NASDAQ:TFSL), and Ares Management Corp (NYSE:ARES). Although LMND has traded at a recent price of $20.73/share, the average analyst target is 54.71% higher at $32.07/share. Similarly, TFSL has 46.44% upside from the recent share price of $14.34 if the average analyst target price of $21.00/share is reached, and analysts on average are expecting ARES to reach a target price of $94.38/share, which is 38.40% above the recent price of $68.19. Below is a twelve month price history chart comparing the stock performance of LMND, TFSL, and ARES:

LMND, TFSL, and ARES 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
iShares U.S. Financials ETF IYF $75.14 $94.97 26.39%
Lemonade Inc LMND $20.73 $32.07 54.71%
TFS Financial Corp TFSL $14.34 $21.00 46.44%
Ares Management Corp ARES $68.19 $94.38 38.40%

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:   ARES   Analyst   Ares   Below   Corp   ETFs   FREEGet   Financial   Financials   LMND   Lemonade   Management   NYSE   TFSL   Target   Upside   With   Zacks   about   above   analyst   analysts   average   background   based   border   bottom   color   data   font   from   have   hctblstyle   holdings   iShares   implied   latest   mdash   month   price   recent   report   research   share   target   targets   that   trading   underlying   upside

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