Good things normally come to those who wait. But you might not want to hold off selling some of 2021’s top S&P 500 stocks, analysts say.
Analysts are calling for some of 2021’s very top stocks, like health care giants Pfizer (PFE) and Moderna (MRNA), plus industrial Old Dominion Freight Line (ODFL) and technology firm Seagate Technology (STX), to fall or go nowhere in the next 12 months, says an Investor’s Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith.
Lukewarm price targets on hot S&P 500 stocks is a warning to investors wondering what’s coming in 2022 for the S&P 500 following years of big gains. The S&P 500 is up more than 20% this year. And it jumped more than 16% in 2020 and nearly 29% in 2019.
“It does not feel like the most wonderful time of the year for Wall Street,” said Edward Moya, senior market analyst at Oanda.
S&P 500 Stocks Up Huge
It’s easy to see why analysts might not be so bullish on some of 2021’s biggest stock winners. The gains this year have been enormous, making a follow-up all the more difficult for some stocks.
Investors are up more than $7 trillion just in 2021 so far, says Wilshire Associates. And keep in mind this year’s 20%-plus gain in the S&P 500 piles on top of three-years of straight annual gains. The S&P 500 hasn’t fallen since slipping just 6.2% in 2018. All told, the S&P 500 roughly doubled in the past five years.
And that is due to some massive rises this year by top S&P 500 stocks. Already this year, 50 stocks in the S&P 500, or a tenth, are up an impressive 50% or more. All told, more than 80% of S&P 500 companies rose in 2021.
But analysts are calling the end for now on some of these big gainers’ runs.
Analysts Pull Back On Vaccine Champs Like Pfizer
There’s no way to underappreciate the massive scientific accomplishments of both Pfizer and Moderna this year. Both of the companies’ vaccines are the gold standards in the world in combating Covid-19.
And the stocks, too, are remarkable. Shares of Pfizer are up a staggering 65% in 2021. And Moderna is one of the top stocks in the S&P 500 this year with a rise of 165%. But analysts are thinking the gains are baked in, and are calling for both stocks to be lower in 12 months than they are now.
Pfizer has one of the most skilled CEOs in business today. But analysts think Pfizer shares should trade for 54.07 in 12 months. If they’re right, that’s a decline of more than 11%. That would also erase the company’s generous 2.7% dividend. There’s some fundamental reason to understand where analysts are coming from. Pfizer’s profit is seen jumping nearly 40% in 2022. But analysts think profit will slide more than 20% in 2023. And remember, Pfizer’s stock price by the end of 2022 will be pricing in 2023 profit.
It’s a similar story for Moderna. Analysts think the stock will be worth 271.13 a share by the end of 2022, or nearly 2% lower than it is now. And profit trends look similar. Analysts think profit will drop in half in 2023, after rising more than 4% in 2022.
Locking Up S&P 500 Technology Gains
S&P 500 technology stocks won big in 2021. So, it’s not surprising to see shares of computer storage firm Seagate Technology soar nearly 70% this year. But you might want to think about locking in some gains, if analysts are right.
Wall Street expects Seagate’s stock to sink 1.2% over the next 12 months to 104. Again, it’s a story of moderating profit growth. Seagate’s profit is only seen rising roughly 5% in 2022. Keep in mind the company’s profit exploded by more than 70% in 2021 — completely justifying its 70% stock price move. The stock, though, yields 2.7% helping to smooth over any stock price skid. But it would still leave you with a net gain of about the same as a 10-year Treasury at 1.4%.
It’s not just tech, though, where analysts think some S&P 500 top stocks are due to cool off. Shares of Big Cap 20 trucker Old Dominion are also up more than 70% this year. Supply chain logjams helped lift rates and demand for shipping services. But analysts think the stock is likely to slide 2.4% over the next 12 months. Following a 53% jump in profit in 2021, earnings per share growth is also seen cooling to just 18% in 2022.
It’s possible analysts are slow to update targets and will end up a dollar or two short on their 12-month stock price estimates. But these S&P 500 stocks are up so much already, a fair question is how much of a gain you could expect again in 2022.
Don’t Expect Much From These Top S&P 500 Stocks
All are up more than 50% in 2021, but analysts think they will be lower in 12 months
|Company||Ticker||Stock YTD % ch.||Sector||Implied downside to analysts’ 12-month price target|
|Iron Mountain||(IRM)||72.8||Real Estate||-6.6|
|Arista Networks||(ANET)||84.9||Information Technology||-3.0|
|West Pharmaceutical Services||(WST)||55.0||Health Care||-3.2|
|Robert Half International||(RHI)||69.7||Industrials||-3.4|
|Old Dominion Freight Line||(ODFL)||71.0||Industrials||-2.4|
|Seagate Technology||(STX)||69.1||Information Technology||-1.1|
Sources: BofA, S&P Global Market Intelligence
Follow Matt Krantz on Twitter @mattkrantz
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