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Look Under The Hood: IHI Has 13% Upside

By Dividend Channel Staff, Thursday, October 11, 7:45 AM ET
Play Video: The Importance of ETFs


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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 iShares U.S. Medical Devices ETF (NYSE:IHI), we found that the implied analyst target price for the ETF based upon its underlying holdings is $235.22 per unit.

With IHI trading at a recent price near $208.84 per unit, that means that analysts see 12.63% upside for this ETF looking through to the average analyst targets of the underlying holdings. Three of IHI's underlying holdings with notable upside to their analyst target prices are TransEnterix Inc (AMEX:TRXC), BioTelemetry Inc (NASDAQ:BEAT), and Varex Imaging Corp (NASDAQ:VREX). Although TRXC has traded at a recent price of $4.51/share, the average analyst target is 38.58% higher at $6.25/share. Similarly, BEAT has 26.57% upside from the recent share price of $52.41 if the average analyst target price of $66.33/share is reached, and analysts on average are expecting VREX to reach a target price of $31.50/share, which is 24.75% above the recent price of $25.25. Below is a twelve month price history chart comparing the stock performance of TRXC, BEAT, and VREX:

TRXC, BEAT, and VREX 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
iShares U.S. Medical Devices ETF IHI $208.84 $235.22 12.63%
TransEnterix Inc TRXC $4.51 $6.25 38.58%
BioTelemetry Inc BEAT $52.41 $66.33 26.57%
Varex Imaging Corp VREX $25.25 $31.50 24.75%

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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This Article's Word Cloud:   Analyst   BEAT   Below   BioTelemetry   Corp   Devices   ETFs   FREEGet   Imaging   Medical   TRXC   Target   TransEnterix   Upside   VREX   Varex   With   Zacks   about   above   analyst   analysts   average   background   based   border   bottom   color   data   font   from   have   hctblstyle   holdings   iShares   implied   latest   month   padding   price   recent   report   research   share   target   targets   that   trading   underlying   upside

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