Photo: Bloomberg Television
We last heard from Savita Subramanian two months ago when she boosted her year-end target on the S&P 500 from 1,350 to 1,400.Subramanian, Bank of America’s top U.S. equity strategist, is back and she just boosted her target again.
From her note to clients this morning:
Since we last updated our S&P 500 target in March, the readings on two of our five input models have turned more bullish on stocks: the Sell Side Indicator and the Estimate Revision Ratio. As a result, we are raising our 2012 year-end target from 1400 to 1450, which represents modest upside of about 6% from current levels. All but one of our models are now forecasting healthy returns of 10-19% for the remainder of this year, with exception being our Fair Value model.
BofA’s Sell Side Indicator is a contrarian metric that turns bullish when Wall Street sell-side strategists turn bearish. According to the measure, strategists haven’t been this bearish since April 2009.
The Earnings Revision Ratio has increased to 1.0 in April from 0.8 in March, which means just as many analysts are making upward revisions to earnings estimates as analysts are making downward revisions.
Like most strategists, Subramanian is concerned elevated uncertainty could keep risk premiums high in the near term. Her advice: “Be an investor, not a speculator.”
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