Analysts See Dow Rising Sharply in 2008

After last week's horrendous start to the year, Dow 15,000 certainly doesn't roll off of the tongue as easily as it did one week ago. If analyst price targets are in the ballpark though, the Dow should rise by 19% from current levels, putting Dow 15,000 within reach by the end of the year.

Below we highlight the percentage difference between the current price of each of the Dow's thirty stocks versus the average analyst price target for each stock. Based on these results, GM is forecast to have the biggest gain with a rise of nearly 50% from current levels, while KO is expected to rise only 4.6% from its current price.

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We have often pointed out that analyst price targets should be taken with a grain of salt. For what it's worth though, we would note that at the start of '07, we did a similar analysis and came up with a price target of just over 13,300, and the Dow finished the year at 13,264.8.

Comments

[Richie:]

You said it! What the hell do analysts know. I'm one, and I know that in my business the situation you have is the blind leading the blind --- and praying.

2008 Jan 08 01:25 PM

[Matt Blackman:]

I wonder what the analysts' track record is? They rarely mention that in such forecasts. Correct me if I'm wrong but wasn't Abbey Cohen bullishly optimistic in January 2000 as the market was peaking and didn't Glassman predict a Dow of 36,000 in 1999? And who can forget Henry Blodget?

I would bet that fundamental analysts have a similar accuracy to economists and here is a report on their accuracy at predicting economic slowdowns...

"In 1929, days after the stock market crash, the Harvard Economic Society reassured its subscribers: “A severe depression is outside the range of probability” In a survey in March 2001, 95% of American economists said there would not be a recession, even though one had already started. Today, most economists do not forecast a recession in America, but the profession's pitiful forecasting record offers little comfort." – Economist November 15.

2008 Jan 08 04:13 PM

[NoFate:]

"We have often pointed out that analyst price targets should be taken with a grain of salt."

Ummm ...should be taken with a salt mine in this case.

Interesting article, but it seems the main conclusion is how laughable analyst's price targets really are.

2008 Jan 09 04:36 AM

[James Cullen:]

The major flaw in this analysis is that it assumes all stocks will be at their price targets at the same time...

2008 Jan 10 06:42 PM