Peek Under The Hood: VIOO Has 13% Upside

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 Vanguard S&P Small-Cap 600 ETF (VIOO), we found that the implied analyst target price for the ETF based upon its underlying holdings is $150.52 per unit.

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With VIOO trading at a recent price near $133.09 per unit, that means that analysts see 13.10% upside for this ETF looking through to the average analyst targets of the underlying holdings. Three of VIOO's underlying holdings with notable upside to their analyst target prices are CryoLife, Inc. ( CRY), Pioneer Energy Services Corp ( PES), and AMAG Pharmaceuticals, Inc. ( AMAG). Although CRY has traded at a recent price of $16.85/share, the average analyst target is 43.03% higher at $24.10/share. Similarly, PES has 42.86% upside from the recent share price of $2.80 if the average analyst target price of $4.00/share is reached, and analysts on average are expecting AMAG to reach a target price of $17.40/share, which is 41.46% above the recent price of $12.30. Below is a twelve month price history chart comparing the stock performance of CRY, PES, and AMAG:

CRY, PES, and AMAG 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
Vanguard S&P Small-Cap 600 ETF VIOO $133.09 $150.52 13.10%
CryoLife, Inc. CRY $16.85 $24.10 43.03%
Pioneer Energy Services Corp PES $2.80 $4.00 42.86%
AMAG Pharmaceuticals, Inc. AMAG $12.30 $17.40 41.46%

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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