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A number of bank research firms have increased their price targets for the S&P 500 in recent weeks.
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The adjustments come as the index continues its bull market, up 3% last month and 23% this year.
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The S&P 500 has hit 46 all-time highs in 2024.
The bull market has not weakened in the fourth quarter, and top bank research firms have rushed to raise their price targets for the S&P 500 through the end of the year.
Strategists from Goldman Sachs, UBS, BMO and Deutsche Bank have raised their year-end price targets for the S&P 500 in recent weeks, as the benchmark index continues to reach record highs. On Monday, the index hit its 46th all-time high of 2024.
UBS strategists Jonathan Golub and Patrick Palfrey raised their year-end price target to 5,850 from 5,600, marking their fourth upgrade since late last year.
The target is just above the level at which the index is trading on Wednesday, but the analysts predict a 9% increase over the next fifteen months and raised their 2025 target on Tuesday from 6,000 to 6,400.
Earlier this month, Goldman Sachs raised its index target for December to 6,000, marking the fourth increase since late last year. The call from the company’s chief equity strategist David Kostin is the second-highest among calls tracked by Bloomberg.
Kostin said the estimates were driven by a stable macro outlook and greater margin expansion.
“The primary driver for the upward revision to our 2025 EPS estimate is greater margin expansion,” Kostin said. “The macroeconomic backdrop remains supportive of modest margin expansion, with prices exceeding input cost growth.”
Kostin’s price target is just behind that of Brian Belski, BMO’s chief equity strategist, who raised his forecast to 6,100 from 5,600 last month. Belski’s new target implies a gain of almost 5% over the rest of this year.
Belski said his upgrade was based on strong market gains so far this year, which he said typically leads to stronger-than-normal profits in the fourth quarter.
“We remain surprised by the strength of market gains and once again determined that something more than an incremental adjustment was warranted,” Belski said in a note.
He added that easing from the Federal Reserve and a broader market rally will only contribute to further gains.
Deutsche Bank also raised its year-end target for the S&P 500 last month, from 5,500 to 5,750. The bank’s strategists pointed to strong corporate earnings and capital inflows, increasing share buybacks and higher risk sentiment.
“We see S&P 500 earnings growth remaining robust at low double digits, in line with typical growth rates outside of recessions,” the strategists said in a note.
The strategists’ target increases come amid a chorus of strategists who are decidedly more optimistic about the market. JPMorgan’s chief equity strategist, Dubravko Lakos-Bujas, recently advised that investors should become less defensive after a strong jobs report in September.
“While it is too early to assume this is a turning point, it does suggest that a recession is unlikely in the near term, especially as surprisingly strong job growth and a decline in unemployment have broken a slowing trend in the labor market . he said in a note earlier this month.
Lakos-Bujas, however, kept his price target of 4,200 for the S&P 500 unchanged.
The more optimistic predictions for 2024 come as the bull market continues, with the S&P 500 up 3.2% last month and 22.6% this year. However, several risks remain, with the upcoming US presidential election in November, an unclear path of monetary policy easing by the Fed, as economic data is mixed and the war in the Middle East continues to threaten stability in the region and beyond.
“Uncertainty about fiscal and monetary policy and possible election outcomes mean that returns for 2025 are far from certain,” UBS analysts said.
Read the original article on Business Insider
