UBS has adjusted its S&P 500 index target, surpassing a previous forecast by another division within the same bank that had updated its outlook just last week.
Strategists at UBS, led by Jonathan Golub, increased their S&P 500 target to 5,600 from 5,400, citing improved earnings expectations.
On Friday, the S&P 500 SPX closed at 5,304.72, marking an 11% gain for the year.
“At the end of the first quarter, before the start of the earnings season, consensus estimates predicted [earnings per share] growth of 4.1%. However, it now seems growth will reach 10.6%,” they explained.
Though earnings forecasts usually decline over time, the UBS team noted that subsequent quarterly earnings estimates have remained strong.
They raised their S&P 500 EPS target for this year by 11% to $245, and for next year to $260.
Last week, UBS’s chief investment office had increased its S&P 500 target to 5,500 and also revised its EPS forecast to $250 for 2024 and $265 for 2025.
“In our view, the current environment is still favorable, with four main drivers for the equity market still largely intact:
- 1) solid earnings growth,
- 2) disinflation,
- 3) a Fed pivot,
- 4) increasing AI investment,
” they stated.
