Equities analysts at Swiss bank UBS, raised the June 2024 price target on the S&P 500 to 4,700 per share as they expect earnings growth will improve in 2024.
UBS now expects S&P 500 EPS of $220 (0% YoY, +4% YoY ex-energy) for 2023 and $240 (+9% YoY) for 2024.
“The more resilient economic activity is having a favorable impact on corporate profits. With second quarter earnings season largely complete, the results give us conviction that S&P 500 EPS growth has likely troughed,” the analysts said in a client note.
The 2023 year-end target for the S&P 500 is 4,500 with UBS expecting “largely range-bound” markets in the near term.
“Stocks should be able to climb a bit higher in 2024 as earnings growth improves and the market begins to anticipate eventual Fed rate cuts if inflation continues to trend to the Fed’s target,” the analysts added.
The blue-sky scenario could take the S&P 500 to 5,200, UBS added. This will be possible if AI really proves to be a game-changer, as well as if economic growth proves to be resilient and inflation “cools quickly.”
On the other hand, a U.S. recession and high inflation could facilitate a drop in the S&P 500 to 3,500.
S&P 500 closed at $4,514.87 on Wednesday.