Implied PSJ Analyst Target Price: $53

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 PowerShares Dynamic Software Portfolio ETF (PSJ), we found that the implied analyst target price for the ETF based upon its underlying holdings is $52.54 per unit.

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With PSJ trading at a recent price near $47.35 per unit, that means that analysts see 10.95% upside for this ETF looking through to the average analyst targets of the underlying holdings. Three of PSJ's underlying holdings with notable upside to their analyst target prices are Five9, Inc ( FIVN), BroadSoft Inc ( BSFT), and Zynga Inc ( ZNGA). Although FIVN has traded at a recent price of $13.79/share, the average analyst target is 18.75% higher at $16.38/share. Similarly, BSFT has 18.66% upside from the recent share price of $39.85 if the average analyst target price of $47.28/share is reached, and analysts on average are expecting ZNGA to reach a target price of $3.34/share, which is 18.37% above the recent price of $2.82. Below is a twelve month price history chart comparing the stock performance of FIVN, BSFT, and ZNGA:

FIVN, BSFT, and ZNGA Relative Performance Chart

Combined, FIVN, BSFT, and ZNGA represent 8.06% of the PowerShares Dynamic Software Portfolio ETF. 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
PowerShares Dynamic Software Portfolio ETF PSJ $47.35 $52.54 10.95%
Five9, Inc FIVN $13.79 $16.38 18.75%
BroadSoft Inc BSFT $39.85 $47.28 18.66%
Zynga Inc ZNGA $2.82 $3.34 18.37%

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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