JPMorgan: 4,200, $225 EPS (as of Nov. 29) “With a stepdown in economic growth next year (US growth to slow to 0.7% YoY by 4Q24 from 2.8% 4Q23), eroding household excess savings and liquidity, and tightening credit, we see 2024 consensus hockey-stick EPS growth of 11% as unrealistic… Negative corporate sentiment should be a catalyst for sharply lower estimates early next year.“
Morgan Stanley: 4,500, $229 EPS (as of Nov. 13) “Near-term uncertainty should give way to an earnings recovery... Our 2024 EPS estimate [of $229] is consistent with output from our leading earnings models, which show a recovery in growth next year as well as our economists' expectations for growth next year... 2025 represents a strong earnings growth environment (+16%Y) as positive operating leverage and tech-driven productivity growth (AI) lead to margin expansion. On the valuation front, we forecast a 17.0x forward P/E multiple at the end of next year (20-year average P/E is 15.6x; currently 18.1x).“
UBS: 4,600, $228 EPS (as of Nov. 8) “Our 2024 target is based on a YE 2024E multiple of 18.5x (a -0.7x multiple point contraction) applied to 2025E EPS of $249. While UBS anticipates a steep decline in yields over this period, higher equity risk premiums should offset this benefit.“
Wells Fargo: 4,625, $235 EPS (as of Nov. 27) “With VIX low, credit spreads tight, equities rallying, and cost of capital higher/volatile, it's time to downshift. Expect a volatile and ultimately flattish SPX in 2024 (4625), as valuation limits upside and rate uncertainty elevates downside risk.“
Goldman Sachs: 4,700, $237 EPS (as of Nov. 15) “Our baseline assumption during the next year is the U.S. economy continues to expand at a modest pace and avoids a recession, earnings rise by 5%, and the valuation of the equity market equals 18x, close to the current P/E level. Our forecast falls slightly below the typical 8% return during presidential election years.“
Societe Generale: 4,750, $230 EPS (as of Nov. 20) “The S&P 500 should be in ‘buy-the-dip’ territory, as leading indicators for profits continue to improve. Yet, the journey to the end of the year should be far from smooth, as we expect a mild recession in the middle of the year, a credit market sell-off in 2Q and ongoing quantitative tightening.“
Barclays: 4,800, $233 (as of Nov. 28) “Whether ‘new normal’ or ‘old,’ a roller coaster 2023 proved that this cycle is anything but. We expect US equities to deliver single-digit returns next year as easing inflation is offset by modest economic deceleration.“
Bank of America: 5,000, $235 EPS (as of Nov. 21) “The equity risk premium could fall further, especially ex-Tech: we are past maximum macro uncertainty. The market has absorbed significant geopolitical shocks already and the good news is we’re talking about the bad news. Macro signals are muddled, but idiosyncratic alpha increased this year. We’re bullish not because we expect the Fed to cut, but because of what the Fed has accomplished. Companies have adapted (as they are wont to do) to higher rates and inflation.“
RBC: 5,000, $232 EPS (as of Nov. 22) “While the November rally has likely pulled forward some of 2024’s gains, we remain constructive on the U.S. equity market in the year ahead. Our valuation and sentiment work are sending constructive signals, partially offset by headwinds from a sluggish economy and uncertainty around the 2024 Presidential election. Our work also suggests that the greater appeal of bonds may end up being a dampener of US equity market returns but not necessarily a derailer of them.“
Deutsche Bank: 5,100, $250 (as of Nov. 27) “Are valuations high? We don’t think so. If inflation returns to 2%, as economists forecast and is priced in across asset classes, while payout ratios remain elevated, fair value in our reading is 18x, with a range of 16x-20x, which they have been in for the last 2 years. If earnings growth continues to recover as we forecast, valuations will remain well supported.“
BMO: 5,100, $250 EPS (as of Nov. 27) “[W]e believe U.S. stocks will attain another year of positive returns in 2024, albeit while demonstrating more sanguine, broadly distributed, and fundamentally defined performance relative to the last decade or so. In other words, normal and typical.“
Capital Economics: 5,500 (as of Dec. 1) “Still time for the S&P 500 to party like it’s 1999 …it has come a long way lately, thanks both to a rise in its valuation and to an increase in expectations for future earnings. …This partly reflects investors’ enthusiasm about AI technology. …if AI enthusiasm is inflating a bubble in the S&P 500, it’s one that is still in its early stages. We think the index could therefore make further gains: our end-2024 forecast is 5,500, ~20% above its current level.“
Source: TKer by Sam Ro. Highly recommend subscribing to his newsletter.
