Apple (AAPL) may have won a price target hike this week, but analysts suddenly turned even more bullish on another group of S&P 500 stocks.
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In just one month, analysts jacked up their price targets by 16% or more on nine S&P 500 companies, including consumer discretionary stocks like Lennar (LEN) and American Airlines (AAL) plus tech Adobe (ADBE). And six of the nine are leading S&P 500 companies with an IBD Composite Rating of 90 or higher. Apple, in comparison, has only seen its price target rise 5.1% over the past month.
That’s according to an Investor’s Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith.
Such major and sudden upgrades show analysts are rapidly upgrading their outlook on some members of the S&P 500 amid the recovery. And their brightening views on individual stocks stand in contrast to concerns the S&P 500 itself has moved too much higher already. The SPDR S&P 500 ETF is only down 3% this year.
“We believe the market is pricing in quite a bit of good news,” said Scott Wren, strategist at Wells Fargo Investment Institute. “The rally is likely to take a breather in coming months as the recovery evolves.”
S&P 500: Price Targets Rise On Consumer Discretionary
There’s no question which S&P 500 sector analysts are upgrading their views on the fastest: Consumer discretionary.
Five of the nine S&P 500 stocks with the largest price target hikes in the past month are all in the consumer discretionary sector. And that makes sense. Just a month ago the U.S. economy was all but shut down.
But with homebuying back on and flights slowly returning, stocks in the sector stormed higher. The Consumer Discretionary Select Sector SPDR ETF (XLY) is up more than 47% from the S&P 500’s March low. That’s the second-best showing of any of the 11 S&P 500 sectors after only energy.
S&P 500: Analysts See Bigger Gains From These Winners
Lennar is the S&P 500 price target winner in the eyes of analysts. In just the past month, analysts upped their price target on the homebuilder’s shares more than 30% to 69.50 apiece. And it’s already a leading stock. Shares are up 13.7% so far this year, to 63.46.
Meanwhile, fundamental growth remains strong. Lennar is seen making $6.24 a share this year. That’s up nearly 9% from 2019. Robust profit fundamentals paired with an outperforming stock explains the leading 92 IBD Composite Rating. Meanwhile, if analysts are right that implies there’s still nearly 10% upside.
There’s not as much implied upside in shares of software maker Adobe, though. Analysts upped their price target on the stock by 23% in just a month to 421.02. But that’s been mostly catch-up with the market. The leading stock soared more than 25% this year to 413.49. It carries a perfect Composite Rating of 99.
But at its current price, it’s only 1.8% below the raised price target. That may mean analysts will need to upgrade the target again.
Investors Beg To Differ With Some S&P 500 Targets
Analysts can’t seem to boost their targets fast enough on some S&P 500 stocks. American Airlines is the classic example. But analysts seem to think investors are paying way too much for the stock.
Analysts boosted their price targets on the S&P 500 airline aggressively by 17% the past month to 13.22. But investors already drove the airline’s stock to 16.98. That implies analysts think the stock is overvalued by 22% — even though it’s still down 41% this year. Here’s what you should consider before buying American Airlines stock.
Are S&P 500 analysts always right with their upgrades? Absolutely not. But it’s helpful to know where they see upside in leading S&P 500 stocks.
S&P 500 Stocks With Massive Price Target Hikes
They’re up the most in the past month
| Company | Ticker | % Ch. Price Target From A Month Ago | Price Target Now | Remaining Upside To Target | Sector | Composite Rating |
|---|---|---|---|---|---|---|
| Lennar | (LEN) | 30.9% | 69.50 | 9.5% | Consumer Discretionary | 92 |
| Adobe | (ADBE) | 23.2% | 421.02 | 1.8% | Information Technology | 99 |
| Equifax | (EFX) | 20.9% | 172.16 | 1.0% | Industrials | 95 |
| Leggett & Platt | (LEG) | 18.4% | 34.33 | 0.2% | Consumer Discretionary | 35 |
| eBay | (EBAY) | 18.1% | 48.98 | 1.1% | Consumer Discretionary | 96 |
| Dollar Tree | (DLTR) | 17.2% | 104.24 | 17.0% | Consumer Discretionary | 83 |
| American Airlines | (AAL) | 17.0% | 13.22 | -22.2% | Industrials | 3 |
| CarMax | (KMX) | 16.8% | 93.87 | -3.2% | Consumer Discretionary | 95 |
| Broadcom | (AVGO) | 16.3% | 344.88 | 10.0% | Information Technology | 95 |
Source: IBD, S&P Global Market Intelligence
Follow Matt Krantz on Twitter @mattkrantz
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