Why are these targets important?
Price targets for SP 500 for
2019 TARGET ranged from 2900 to 3100 at the beginning of the year. It reached a high of 2940 and fell considerably once it reached the targets. In 2020, market was expecting Price Target of 3350-3500 prior to Corona Virus.
How are these targets derived?
These price targets are derived by multiplying the earning estimates for the year and the reasonable price multiple. In 2019, S & P 500 was trading at multiple of 14, thanks to the October Rout’.
It is also noted that S&P 500 trades at a multiple of 15-16 historically.
This chart illustrates the historical S&P 500 annual earnings vs year end close. This data has been taken from S&P 500 for illustration purposes.