PBW's Underlying Holdings Imply 22% Gain Potential

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 WilderHill Clean Energy Portfolio ETF (PBW), we found that the implied analyst target price for the ETF based upon its underlying holdings is $4.48 per unit.

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With PBW trading at a recent price near $3.66 per unit, that means that analysts see 22.25% upside for this ETF looking through to the average analyst targets of the underlying holdings. Three of PBW's underlying holdings with notable upside to their analyst target prices are Hydrogenics Corp ( HYGS), Sunrun Inc ( RUN), and LSI Industries Inc. ( LYTS). Although HYGS has traded at a recent price of $4.85/share, the average analyst target is 95.88% higher at $9.50/share. Similarly, RUN has 89.06% upside from the recent share price of $5.10 if the average analyst target price of $9.64/share is reached, and analysts on average are expecting LYTS to reach a target price of $13.00/share, which is 32.38% above the recent price of $9.82. Below is a twelve month price history chart comparing the stock performance of HYGS, RUN, and LYTS:

HYGS, RUN, and LYTS Relative Performance Chart

Combined, HYGS, RUN, and LYTS represent 6.03% of the PowerShares WilderHill Clean Energy 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 WilderHill Clean Energy Portfolio ETF PBW $3.66 $4.48 22.25%
Hydrogenics Corp HYGS $4.85 $9.50 95.88%
Sunrun Inc RUN $5.10 $9.64 89.06%
LSI Industries Inc. LYTS $9.82 $13.00 32.38%

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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