How The Pieces Add Up: SLY Headed For $120

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 SPDR S&P 600 Small Cap ETF (SLY), we found that the implied analyst target price for the ETF based upon its underlying holdings is $119.51 per unit.

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With SLY trading at a recent price near $106.60 per unit, that means that analysts see 12.11% upside for this ETF looking through to the average analyst targets of the underlying holdings. Three of SLY's underlying holdings with notable upside to their analyst target prices are Fabrinet ( FN), Exar Corp. ( EXAR), and MiMedx Group Inc ( MDXG). Although FN has traded at a recent price of $37.96/share, the average analyst target is 32.92% higher at $50.46/share. Similarly, EXAR has 30.27% upside from the recent share price of $9.02 if the average analyst target price of $11.75/share is reached, and analysts on average are expecting MDXG to reach a target price of $11.60/share, which is 30.19% above the recent price of $8.91. Below is a twelve month price history chart comparing the stock performance of FN, EXAR, and MDXG:

FN, EXAR, and MDXG 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
SPDR S&P 600 Small Cap ETF SLY $106.60 $119.51 12.11%
Fabrinet FN $37.96 $50.46 32.92%
Exar Corp. EXAR $9.02 $11.75 30.27%
MiMedx Group Inc MDXG $8.91 $11.60 30.19%

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.

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