UBS says S&P 500 on track to hit its bull-case forecast of 5300 By
2024-02-13 01:20:10

With 80% of companies having reported earnings, numbers have been better-than-anticipated, UBS analysts noted.

Initially, the analysts had forecasted an earnings growth of 4–5% for the fourth quarter, excluding one-time charges related to banks replenishing the FDIC bailout fund. The growth rate is now expected to exceed 7%.

While some large-cap growth companies have posted exceptional earnings, the average S&P 500 company is also expected to see a growth rate of around 6%, UBS highlighted.

“In terms of breadth, 77% of companies are beating EPS estimates, and 65% are beating on revenues. Both are better than average,” analysts at UBS wrote.

Guidance the companies have been releasing this quarter has also shown promising signs.

The S&P 500's first-quarter forecast is adjusting downward as per typical seasonal trends, but the annual projection for 2024 for the median company remains stable. The aggregate earnings forecast for the next 12 months for the S&P 500 is on an upward trajectory, showing improvements across all sectors except for energy and materials.

The positive earnings season contributes to an optimistic market outlook, bolstered by solid economic growth, moderating inflation, anticipated Federal Reserve rate reductions, and significant demand for AI infrastructure.

This aligns with UBS’s more bullish projection, which sees the S&P 500 ending the year at 5,300.

“So, as the rally has continued, markets are pricing in plenty of good news,” Solita Marcelli, Chief Investment Officer Americas, UBS Global Wealth Management, said.

“The MSCI US is trading on 19.8 times 12-month forward earnings, a 20% premium to the 15-year average. The S&P 500 is now trading close to the 5,000 level where we would expect it to end the year in the event of a soft landing.”

So what does need to happen for the S&P 500 to reach UBS’ bull-case scenario?

“We would need to see further positive signs on inflation, Fed policy, and growth, including from data and earnings releases this week,” Marcelli added.

UBS’ bull-case scenario implies approximately 5.5% upside from the current levels.

The content of this article does not represent the views of fxgecko website. The content is for reference only and does not constitute investment suggestions. Investment is risky, so you should be careful in your choice! If it involves content, copyright and other issues, please contact us and we will make adjustments at the first time!

Related News

您正在访问的是FxGecko网站。 FxGecko互联网及其移动端产品是中国香港特别行政区成立的Hitorank Co.,LIMITED旗下运营和管理的一款面向全球发行的企业资讯査询工具。

您的IP为 中国大陆地区,抱歉的通知您,不能为您提供查询服务,还请谅解。请遵守当地地法律。