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With the S&P 500 less than 2% from its historic all-time high, the bull market is one good day away from setting a new record.
Securities forecasters on Wall Street believe the stock market will zoom past that new high and keep going. In fact, company analysts collectively see a 7% gain in store over the next 12 months for the benchmark, based on their individual 12-month price forecasts for S&P 500 companies, according to calculations from FactSet.
FactSet takes individual company analysts’ 12-month price targets and adds them up to get a top-line forecast of the overall market, which shows the S&P 500 could reach 3,097, or 7% from here, over the next year. This forecast is more bullish than the top-down forecast from Wall Street’s macro forecasters, who see a slight increase in the S&P 500 to 2,950.
Company analysts see stocks like Jefferies and Cigna leading the gains in the S&P 500 for this next stretch and see biopharmaceutical company Nektar Therapeutics doubling in the next 12 months.
Based on the difference between the bottom-up target price and the current trading level, Nektar is set to have 110% upside in the next 12 months. Industry analysts are also particular bullish on Jefferies, Cigna, medical implant manufacturer Abiomed, and oil and natural gas company Diamondback Energy.
On the other end of the spectrum, stocks including semiconductor company Advanced Micro Devices, asset manager Franklin Resources, Chipotle Mexican Grill, semiconductor manufacturer Xilinx and lab and software company Waters Corporation are set to have double-digit losses.
To be sure, Wall Street has not always been accurate in predicting the future value of the market. In fact, these individual company analysts tend to be overly optimistic. Over the past five years, the S&P 500 has ended up 1.5% lower than their forecast. Over the past 15 years, the index has been almost 10% below Wall Street’s target.