Stock market strategist raises S&P 500 price target by 16% to 4,700 as rally keeps defying skeptics

The stock market’s 20% rally this year has prompted some Wall Street strategists to reevaluate their outlook for the S&P 500 and boost their price targets.

Credit Suisse is the latest firm to reassess as the benchmark index continues its blistering rally into the dog days of summer.

A team of analysts led by Jonathan Golub increased their year-end S&P 500 price target by 16% to 4,700 from an initial target of 4,050. An increase to the new price target suggests potential upside of 3% from current levels. The S&P 500 hit a new 52-week high of 4,578 on Wednesday.

The Credit Suisse team said in a Wednesday note that because of ongoing improvements in the economy, a declining likelihood that a recession is imminent, and strong positive earnings revisions for some of the largest technology companies, the strong rally in stocks is justified.

That might be a wakeup call to lingering bears like Morgan Stanley’s Mike Wilson, who expected the bear market of 2022 to spill over into this year.

“Job openings remain abundant, which is inconsistent with a recession in the near term,” Credit Suisse said. “The pace of firings (weekly jobless claims) is inconsistent with a recession.”

And the gains could continue into 2024 as profits from the technology sector are expected to drive meaningful growth, according to the note. The expected jump in corporate earnings, combined with stock buybacks, drove Credit Suisse to increase its S&P 500 EPS estimates to $220 for 2023 and $237 for 2024. Prior estimates were $215 and $220 in 2023 and 2024, respectively.

Source: Business Insider