BTIG’s Dan Greenhaus borrows from Britney Spears’ 2001 song “I’m Not a Girl, Not Yet a Woman” to express his feelings for the stock market.
“With apologies to Britney Spears; Not a bull, not yet a bear,” writes Greenhaus in his new 2015 Investment Outlook note.
In all seriousness, that line perfectly captures how much of Wall Street feels about the stock market right now. The consensus sees modest gains coming, and little risk of a major downturn.
Greenhaus’ 2015 year-end target for the S&P 500: 2,200.
Like Savita Subramanian at Bank of America Merrill Lynch and Tobias Levkovich at Citigroup, Greenhaus sees the S&P 500 rising by a modest 6% from current levels, an increase that is expected to be in-line with earnings growth with no help from multiple expansion.
“We believe the bias for stock prices in general remains to the upside, underpinned by a growing economy, low interest rates and increasingly, cheaper oil,” Greenhaus writes.
“With operating margins at elevated levels, top line growth is poised to more quickly bleed through to the bottom line, thus supporting earnings.”
Greenhaus says that the strength of the dollar, however, should weigh on international earnings, while the decline in oil prices will weigh on energy stocks.
Greenhaus also notes that the market will likely have to contend with the Federal Reserve’s first interest rate hike in 2015, and historically, the stock market has not performed well after the Fed raises rates.
Following rate hikes in 1999 and 2004, the S&P 500 fell 12% and 7%, respectively, within the next five months.
And so although Greenhaus sees S&P 500 earnings growing by 6.7% to $US126 in 2015 with GDP growth coming in closer to 3% — up from 2014’s 2% rate — another huge year of gains for the stock market will be hard to come by.
Here’s what other top Wall Street strategists are expecting for next year:
- Credit Suisse’s Andrew Garthwaite: 2,100
- Goldman Sachs’ David Kostin: 2,100
- Barclays’ Jonathan Glionna: 2,100
- Deutsche Bank’s David Bianco: 2,150
- BTIG’s Dan Greenhaus: 2,200
- Citi’s Tobias Levkovich: 2,200
- Bank of America Merrill Lynch’s Savita Subramanian: 2,200
- UBS’s Julian Emanuel: 2,225
- Morgan Stanley’s Adam Parker: 2,275
- Oppenheimer’s John Stoltzfus: 2,311