Analysts raise their stock market targets

Strategists previously thought the S&P 500 could hit 1,800 by June. As it turns out, they underestimated by quite a bit.

By MSN Money Partner Jan 6, 2014 4:19PM
Image: Stock market (© Corbis)By Matthew Boesler, Business Insider

Six days into the new year, RBC's Jonathan Golub has become the second Wall Street strategist to boost his 2014 price target for the  Standard & Poor's 500 Index ($INX).

The reason: Stocks have risen quickly since the Federal Open Market Committee's Dec. 18 decision to begin winding down the Federal Reserve's quantitative easing program, causing some to rethink just how good of a year it could be for the market.

In a note to clients, Golub writes:

Raising our 2014 price target

On Oct. 2, we introduced our 2014 S&P 500 target at 1,950, based on EPS of $119 and $130 for 2014 and 2015. Further, we forecast that multiples would drift from 14.4x to 16.0x over the next several years, finishing 2014 at 15.0x. Our target was consistent with 16.0% potential upside through year-end 2014 (12.6% annualized).

The crux of the thesis that we laid out in October remains unchanged.

  1. Slack in the economy will keep the Fed from disruptively removing accommodation
  2. Risk-averse corporate behavior will drive EPS higher
  3. Valuations should renormalize closing the gap between earnings yields and interest rates

We are raising our year-end 2014 price target to 2,075 from 1,950. The re-rating (re- normalization) process that we anticipated is happening faster than originally expected. 

Hence, we are raising our 2014 year-end-target multiple to 16.0x.

Golub's 2075 target now makes him -- along with JPMorgan's Tom Lee, who is also forecasting 2075 on the index by the end of the year -- the most bullish strategist on Wall Street.

Last week, Tobias Levkovich, Citi's chief U.S. equity strategist, hiked his 2014 S&P 500 target, citing similar factors.

"The S&P 500 has basically achieved its mid-2014 target as tapering delays and fiscal progress have contributed to lower risk premiums and higher P/E multiples," wrote Levkovich. "When laying out a 12-month view in May 2013, the notion of 1,800-1,850 on the S&P 500 by June 2014 was considered likely, but these gains have been pulled forward into 2013."

More from Business Insider
Jan 6, 2014 6:15PM

Full speed ahead Captain.

No worry... she's unsinkable I tell you.

And we don't need to clutter the deck with lifeboats.

Jan 6, 2014 9:11PM
Of course these wall street pyramid scheme goofs perdict it's going higher. That's the only way these sad sacks can continue to rake in more money for doing absolutely nothing. I doubt they ever predicted any market index will go down? In the same way, realtors continued to preach higher prices for housing in 2007 until it all blew up in their faces... and then the big dumb government came riding in to "rescue" them.
Jan 6, 2014 9:17PM
It might and then again it might not.  These "experts" haven't a clue.
Jan 7, 2014 1:08AM
Or the welfare can be terminated and this complete fraud will sink like Obozo's illusion of ever solving any problem.
Jan 7, 2014 3:39AM
Our economy and trade markets are as solid as the Titanic! So stop worrying.....
Jan 7, 2014 6:45AM
i read someplace a while back the s&p was over rated when it hit 1300  ???   i am still betting this is all on paper  and will crash as the feds  drop the qt .  we have been lied to so  much it is hard to believe anything that comes out  of any bodies  mouth  government  media   banks   ect ect  government military is  building up  defense  against american  citizens .  not always crazy about the  tea  party  but the  more they  say  the  more truth  there is to what they are saying
Jan 6, 2014 7:06PM
Just another so called "financial expert" fishing for investor money.  Wall St needs an enema to flush out all the bullsh@t!!
Jan 6, 2014 7:19PM
Yea right and come May they dump and go sailing in the Caribbean with retail investors $$$$
Jan 7, 2014 1:36AM
The question should be when have these frauds ever lowered their stock market targets.
Jan 7, 2014 9:28AM

This is no big stretch of a prediction. The new Fed. chairman (opps-chair-person) will continue Bernanke's QE. And even when the tapering starts that might put downward pressure on the market, it will be short lived.


You should have many more American's ACTIVELY looking for work now with extended unemployment benefits ending, that will be able to actually participate in the growing economy instead of causing a drag on it- and as a result- have that opportunity to lift themselves out of being dependent on government handouts- which is the real reason this 'recovery' hasn't really happened for the majority of Americans.

Jan 7, 2014 8:44AM
I'm not buying it. Too many problems hitting this year.
Jan 7, 2014 3:37AM
Man! Am I glad that I bought that NSA stock before bad! Never mind. Go Chargers!
Jan 7, 2014 9:34AM
As the captain (OBAMA) says to the Slaves (MIDDLECLASS) ROW...ROW...ROW...ROW!
Jan 7, 2014 10:51AM
Nobody trust "Analysts" anymore. Analysts are worse than useless and impotent.
Jan 7, 2014 12:01PM
I can hardly wait for another Rove and Repukelican moment of denial and disbelief later this year.

Happy voting!

Jan 7, 2014 11:45AM
They had to move those targets to the 6th floor, because a Koch brothers shrine of worship was being built on the 3rd floor where they used to keep those targets.
Jan 6, 2014 11:33PM

Lemmee see, today Markets down many stocks up.....Pretty good day.

And then they(some) start talking big gains on S&P on the 6th. day of the year and the 3rd. investment day..

What is an investor to do, say p'shaw or go all in...??

Jan 7, 2014 8:59AM

"Benchmark U.S. oil for February delivery was up 27 cents to $93.70 a barrel at mid-afternoon Kuala Lumpur time in electronic trading on the New York Mercantile Exchange. The contract fell 53 cents to settle at $93.43 a barrel on Monday. Brent crude, used to set prices for international varieties of crude, rose 66 cents to $107.39 in London.
Crude prices were bolstered by the cold wave in the U.S., the world's top oil consumer, as consumption of heating oil is expected to surge.
Dangerously cold polar air snapped decades-old records, spreading Tuesday from the Midwest to southern and eastern parts of the U.S. and eastern Canada. Many cities came to a virtual standstill, with flights cancelled and schools and businesses shuttered due to the severe cold. Forecasters said some 187 million people in all could feel the effects of the "polar vortex" by the time it spreads across the country. In other energy futures trading:
— Wholesale gasoline rose 1.5 cents to $2.661 a gallon.
— Natural gas added 3.3 cents to $4.339 per 1,000 cubic feet.
— Heating oil was up 1.7 cent to $2.956 a gallon."

When you give BILLIONS monthly to bad business and financial crooks, that NEVER trickles ONCE into the real economy, you get times like these where profit opportunity surpasses commonsense and humanity.

You will pay for this. WORST legacy in human history, all the tools, held by fools, who think they do good, while living on salaries born from the taxes of destitute suppressed job blockaded REAL people. If Yellen continues QE and drives us to ruin... I will citizen's arrest you for terrorism. If alumni in office suites on salaries in jobs they perform bureaucratically in now, are not forced into the streets to create viable enterprise... I will citizen's arrest you for terrorism. It's not rocket science; just greed, crime and psychopathy. 

Jan 7, 2014 3:04AM
God Bless our President and thank you for saving our economy by hiring MIT-trained turnaround specialists instead of religious fanatics to fix our broken government. Pray for a Democrat-controlled Congress so we can push the Tea Party back into the harbor where they belong.
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