Analysts: Expecting a 30% Rally Over the Next 12 Months?

According to Birinyi Associates' most recent bottoms up analysis on the S&P 500, a consensus of analysts covering those stocks expect the market to rally over 31% within the next year.  (This is calculated as if every stock were to reach its respective price target within the specified time - usually 1 year or 6 months.)  Anyone who has been watching stocks over the last 6 months probably knows, not thinks... knows, that Google (GOOG) for example will not rally to 620 within the next year.

Analysts are historically bullish on their stocks.  US Steel (X), for example, is trading at an estimated P/E of 2.7.  With the stock down 53% year-to-date, the people trading it obviously do not agree with the analysts.  Earnings season begins tomorrow.  We would not be surprised to see a string of estimate revisions and downgrades as these companies come closer to reporting.  With that in mind, market bottoms are sometimes associated with extreme negative sentiment.

Comments

[baloney:]

A 31% rally from where?

2008 Oct 06 11:11 AM

[css1971:]

Doesn't matter where. If you print enough notes you can reach the moon...

2008 Oct 06 11:15 AM

[PastTense:]

This is not useful unless you give up comparable historical figures. It may be true that analysts always think their stocks are going to be up 31% no matter if the stock market is at the bottom--or at the top of the cycle.

2008 Oct 06 11:16 AM

[ido:]

"Anyone who has been watching stocks over the last 6 months probably knows, not thinks... knows, that Google (GOOG) for example will not rally to 620 within the next year"

trust me, you and everyone else doesnt KNOW a thing

2008 Oct 06 11:37 AM

[oldgoldbug:]

Thank you ido :" trust me, you and everyone else doesnt KNOW a thing".
It is all speculation, yet it is said with such conviction and certainty. I would like to hear someone say "Sorry, we blew it" but the buy recommendations keep coming as if one has an unlimited source of funds. It all has to be taken with a shaker, not a grain of salt.

2008 Oct 06 11:44 AM

[BYGMi:]

He is spot on, and even little bit conservative. Our calculations support 35% rally over the next 6 months.

2008 Oct 29 03:43 PM