Evercore ISI shouts the highest on Wall Street! Raised S&P 500 year-end target to 6000 points

Zhitong
2024.06.17 00:01
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S&P 500 index hits a new high, Evercore ISI raised its year-end target to 6000 points, becoming the most optimistic forecast on Wall Street. Chief stock and quantitative strategist Emmanuel stated that the optimistic sentiment driving the rise of the S&P 500 index this year is due to economic recovery, improvement in corporate profits, and the end of the tightening cycle by the Federal Reserve. He believes that slowing inflation and the artificial intelligence boom will continue to drive U.S. stocks higher. This expectation is higher than the targets of other major Wall Street banks

According to the financial news app Zhitong Finance, as the S&P 500 index continues to set new records, Evercore ISI has further raised its target. The institution predicts that by the end of 2024, the index will once again see double-digit growth. Chief stock and quantitative strategist Julian Emanuel has raised his year-end forecast for the S&P 500 index to 6000 points, ranking first among major stock strategists tracked by Bloomberg, about 10% higher than the index's closing price last Friday.

Emanuel stated that optimism about economic recovery, improved corporate earnings, and the end of the Federal Reserve's tightening cycle have driven the S&P 500 index up by 14% this year. The fading inflation and the boom in artificial intelligence will further boost US stocks.

It is worth noting that Emanuel's new forecast exceeds the highest year-end targets previously given by major Wall Street banks: Goldman Sachs' David Kostin, UBS's Jonathan Golub, and Brian Belski of BMO Capital Markets all predicted a level of 5600 points.

Last Friday, Goldman Sachs' Kostin just matched the most optimistic year-end target for the S&P 500 index on Wall Street, marking the third time the year-end target has been raised, reflecting Wall Street's optimism about profit growth and the US economy. Among the major banks on Wall Street, JPMorgan Chase has the lowest year-end target for the S&P 500 index at 4200 points, implying a drop of over 20% from last Friday's closing price.

In a note to clients on Sunday, Emanuel wrote, "The pandemic has changed everything, record stimulus policies, high cash balances, and low leverage provide support for consumers, followed by artificial intelligence. Today, GenAI is changing the potential in every job and every industry. Slowing inflation, the Fed's intention to cut rates, and the backdrop of economic growth support the 'golden-haired girl' economy."

Emanuel also raised the earnings per share expectations for the index to $238 in 2024 and $251 in 2025. He said that the new levels imply profit growth of 8% and 5%, respectively.

Emanuel stated that if the S&P 500 index jumps to 6000 points by the end of December, with earnings per share reaching $238, this would raise the index's P/E ratio to 25 times. Although historically the P/E ratio is expected to rise, it will still be lower than the peak of 28 times during the dot-com bubble. Furthermore, he also believes that by the end of 2025, the S&P 500 index could reach 7000 points.

Emanuel mentioned that while the prosperity of artificial intelligence has pushed valuations to the "top 10% since 1960," the P/E ratio of the S&P 500 index may remain at a high level for a "considerable period" of time

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