Photo: Bloomberg Television
Bank of America’s Savita Subramanian is joining a bunch of other Wall Street strategists who are boosting their S&P 500 targets after realising they were too cautious.Her new year-end target is 1,400, up from her initial target of 1,350.
However, Subramanian’s fundamental assumptions are largely unchanged. Rather, her rationale for moving her target is that stocks are just higher. From her note to clients today:
Our year-end target for the S&P 500 is based on a combination of models, including some that are return based. While there has been no major shift in these models since establishing our 1350 target last year, the 25% move in the market has raised the base for some of our models and leads us to raise our 2012 target to 1400. This represents limited upside (about 2%) from current levels. Our 1400 S&P 500 target for year-end 2012 is principally based on our earnings forecast and risk premium assumptions, but if the last several years have taught us anything, it is that fundamentals sometimes take a backseat to sentiment, technicals and the macro backdrop. As a result, we explicitly incorporate these signals into our forecast.
Last week, UBS’s Jonathan Golub boosted his target from 1,325 to 1,475. In January, Credit Suisse’s Andrew Garthwaite boosted his target from 1,340 to 1,400. Citi’s Tobias Levkovich also boosted his target to 1,425 from 1,375.