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.
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.
- Slack in the economy will keep the Fed from disruptively removing accommodation
- Risk-averse corporate behavior will drive EPS higher
- 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
Full speed ahead Captain.
No worry... she's unsinkable I tell you.
And we don't need to clutter the deck with lifeboats.
Full speed ahead Obama.
No worry...the middleclass is unsinkable.
And we don't need to clutter your agenda with a Constitution.
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.
Hello --- cretin. People hate Obuma MORE now that Papa Doc "Care" is taking their money away.
In 2010 , it was just the thought of socialized Medical that CREATED the Tea Party and swept the floor with the commie, I mean Demoncats.
NOW it got worse , moron, not better.
Remember ALL those lies.
The "Rev" Wrong was right !
The Chickens (Working class, tax payers) are coming home to roost !!
LOL @ U
To funny , read under VL's physco rant, the equally physco , disturbed , demented cretin Lost Yo Mind is ALSO attacking her.
Cretin VS Cretin
Beggar VS Beggar
Demented VS Demented
I think this is a trend as 2014 becomes a clean sweep of Commie's out the door.
Vote every commie , Obuma "care " voting bum out on their a$$ this year.
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...??
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
The solid report comes a month after the retailer closed all of its Canadian operations.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.