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Tisdag Maj 28 2024 14:02
4 min
UBS Global Research has raised its year-end S&P 500 forecast, following a division of its own bank that had bumped up its own forecast just last week.
UBS strategists, led by Jonathan Golub, upped their S&P 500 forecast to 5,600 from 5,400, citing an improved earnings outlook and a "supportive" economic backdrop, with fading risks of a U.S. recession.
In a note cited by MarketWatch, they wrote:
“At the close of the first quarter, prior to the onset of reporting season, consensus estimates called [earnings per share] growth of 4.1%. By contrast, it now appears that growth will finish at 10.6%”.
The S&P 500 index ended Friday trading at 5,304.72, marking an 11% gain for the year. The forecast by Golub’s team, if accurate, implies that the index will rise by a further 5.6%. The SPX ticked up 0.08% just after market open on Tuesday, as U.S. traders returned from the Memorial Day weekend holiday.
The 30-stock Dow Jones Industrial Average index, in contrast, has gained just over 3%, sliding 605.78 points, or 1.53%, for its worst session of the year last Friday. It continued its decline in early trading on Wednesday, dipping by 0.24% as of 13:45 GMT.
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Despite typical declines in subsequent earnings estimates, the UBS team noted that quarterly earnings projections have remained strong.
The UBS team increased its S&P 500 earnings-per-share (EPS) target for this year by 11% to $245, and for next year to $260.
Last week, the UBS chief investment office raised its S&P 500 forecast to 5,500 and adjusted its EPS forecast to $250 for 2024 and $265 for 2025. Its analysts wrote:
“In our view, the current environment remains supportive and four key positive equity market drivers remain largely in place: 1) solid earnings growth, 2) disinflation, 3) Fed pivot, and 4) surging AI investment”.
UBS Global Research raised its forecast to 5,400 in February from 5,150, citing higher U.S. inflation as a positive factor for stock prices and corporate margins due to increased pricing power.
With this latest adjustment, UBS aligns with major brokerages such as Deutsche Bank and Wells Fargo, which have also forecasted the index to reach 5,500 or higher in 2024.
Deutsche Bank increased its 2024 year-end S&P 500 target to 5,500 last week, relying on strong corporate earnings to support equity valuations, while BMO Capital Markets predicted a 5,600 finish earlier this month.
As per data cited by Reuters last week, Goldman Sachs maintains an S&P 500 forecast of 5,200, while Barclays sees the SPX hitting 5,300 by year-end. BofA Global Research, HSBC, Morgan Stanley, have updated their projections to 5,400.
Citigroup appears to have one of the lowest S&P 500 forecasts on Wall Street, as it sees the index end the year at 5,100.
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Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice.
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