UBS became the latest major bank to boost its price target, citing a confluence of factors bolstering the outlook for US equities.

The financial services firm has set a new year-end price target for the S&P 500 at 5,500. Moreover, UBS has introduced a June 2025 target of 5,600 for the index.

"Our new June 2025 target represents modest upside from current levels, but our main message is that the backdrop is constructive and investors should have a full allocation to US equities," UBS said in a note released on Thursday afternoon.

The revision follows a period of all-time highs for US equities, driven by softer inflation data, lower interest rates, and a robust first-quarter earnings season.

"Although we are increasing our price targets, our view on the markets has not changed materially."

"As we have been articulating, the market backdrop remains favorable with the same drivers in place: 1) solid and broadening profit growth, 2) disinflation, 3) a Fed likely pivoting to rate cuts, and 4) surging investment in AI infrastructure and applications."

UBS has also adjusted its S&P 500 earnings per share (EPS) estimates upwards by $5 for both this year and the next, in light of the better-than-expected earnings season.

The firm now anticipates an 11% growth in EPS for 2024, reaching $250, and a 6% increase for 2025, resulting in an EPS of $265.

"We maintain a neutral preference for US equities in our tactical asset allocation, but believe the backdrop for US stocks is constructive," the broker's analysts concluded.

The firm's upside scenario calls for the S&P 500 to end the year at 5,700, while the downside scenario calls for a drop to 4,400.

A few days ago, Deutsche Bank and Morgan Stanley raised their price targets on the S&P 500 to 5,500 and 5,400, respectively.

S&P 500 ended the day at 5,267.84, down 0.74% on the day.