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We Did The Math: The iShares PHLX Semiconductor ETF Can Go To $204

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 PHLX Semiconductor ETF, we found that the implied analyst target price for the ETF based upon its underlying holdings is $203.59 per unit.

With SOXX trading at a recent price near $184.68 per unit, that means that analysts see 10.24% upside for this ETF looking through to the average analyst targets of the underlying holdings. Three of SOXX's underlying holdings with notable upside to their analyst target prices are ASML Holding, Silicon Motion Technology and Lam Research. Although ASML has traded at a recent price of $184.53/share, the average analyst target is 21.12% higher at $223.50/share. Similarly, SIMO has 12.37% upside from the recent share price of $41.48 if the average analyst target price of $46.61/share is reached, and analysts on average are expecting LRCX to reach a target price of $192.20/share, which is 10.75% above the recent price of $173.54.

Combined, ASML, SIMO, and LRCX represent 6.67% of the iShares PHLX Semiconductor ETF. Below is a summary table of the current analyst target prices discussed above:

NameSymbolRecent PriceAvg. Analyst 12-Mo. Target% Upside to Target
iShares PHLX Semiconductor ETFSOXX$184.68$203.5910.24%
ASML Holding NVASML$184.53$223.5021.12%
Silicon Motion Technology CorpSIMO$41.48$46.6112.37%
Lam Research CorpLRCX$173.54$192.2010.75%

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.

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