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No one knows for sure what will happen next in the stock market.But there is no shortage of people who get paid to make a prediction
Fourteen of Wall Street’s best sell-side equity strategist have published their 2013 year-end targets for the S&P 500.
Some calls were bearish, like Wells Fargo’s Gina Martin Adams who sees the S&P falling to 1,390.
Others were bullish, like Citi’s Tobias Levkovich who sees the S&P heading to 1,615.
A few veterans, legends, and graybeards like Byron Wien, Richard Bernstein, and David Rosenberg also submitted their forecasts.
We’ve also heard from money management behemoths BlackRock and Federated Investors.
Even the bond gods Bill Gross and Jeff Gundlach made stock market predictions.
Click Here To See What They All Forecast For The S&P 500 >
Below is a round up of what the big Wall Street houses are predicting.
House S&P 500 Target EPS Wells Fargo 1,390 $103.00 UBS 1,425 $108.00 Morgan Stanley 1,434 $98.71 Deutsche Bank 1,500* $108.00 Barclays 1,525 $105.00 Credit Suisse 1,550 $104.90 HSBC 1,560 — Jefferies 1,565 $112.90 Goldman Sachs 1,575 $107.00 BMO Capital 1,575 $106.25 JP Morgan 1,580 $110.00 Oppenheimer 1,585 $108.00 BofA Merrill Lynch 1,600 $110.00 Citi 1,615 $108.00 AVERAGE 1,534 $106.90NOTE: Almost all forecasts were published in December. We suspect many will make adjustments as the details of the fiscal cliff dealings get ironed out.
2013 EPS: $103
Strategist: Gina Martin Adams
Comments: 'The U.S. economy will likely continue to struggle with the ongoing impacts of debt deleveraging in 2013, suggesting policy is likely to be the dominant driver of market sentiment for the fifth year running. However, there is evidence that global deleveraging is progressing along to a new phase in its evolution. The first four years of the process were characterised by private sector debt reduction, the vast majority of which was absorbed by public coffers. Now, as the private sector unwind of debt nears completion, the onus is shifting to the public sector to address bloated debt balances in the year ahead.'
2013 EPS: $108
Strategist: David Bianco
Comments: 'Our 12-month S&P 500 target remains 1500, but modest PE expansion toward the long-term norm of 15+ would make 1600 reasonable...Keeping capital gains and dividend tax rates low and equal, both 23.8% or less, and lower foreign earnings repatriation taxes would make 1600+, or 15x our 2013 EPS of $108, a reasonable 2013 yearend target.'
*Bianco recently lifted his target to 1,575 after the fiscal cliff deal.
Source: Deutsche Bank
2013 EPS: $105
Strategist: Barry Knapp
Comments: 'We are entering the fifth year post 'The Great Contraction' with considerable progress made in deleveraging the financial and household sectors; however, the most complex stage -- stabilizing public sector debt -- remains a formidable challenge. There are some significant competitive advantages that should begin to accrue to the U.S. economy in the years to come -- energy, manufacturing competitiveness and demographics -- though the savings required to fund investment could be redirected to the public sector if policymakers do not slow the growth of mandatory spending.'
2013 EPS: $104.90
Strategist: Andrew Garthwaite
Comments: 'The current level of macro surprises is consistent with significant stronger markets ... We think global GDP growth will accelerate modestly from the current growth rate of slightly below 3% to around 3.2--3.4% in 2013. These GDP growth rates have historically been consistent with total returns of around 10% ... The main are of concern is earnings. We now forecast 2.5% EPS growth in the US (compared to a consensus forecast of 9.4%)'
Source: Credit Suisse
2013 EPS: $--
Strategist: Garry Evans
Comments: 'Our economists see growth disappointing in 2013 with added risk as a result of uncertainty surrounding the fiscal cliff...Political uncertainty is also high and history tells us that the US underperforms in the first year of a presidential cycle.'
2013 EPS: $112.90
Strategist: Sean Darby
Comments: 'Margins are likely to remain higher for longer. While fiscal and external shocks remain, US equities have become more closely aligned with corporate credit markets in the short term. Housing will continue to flourish but the surprise may come from changes in the US corporate tax code to encourage companies to invest.'
2013 EPS: $107
Strategist: David Kostin
Comments: 'S&P 500 sales, which are measured in nominal terms, will rise by 4.4% in 2013 and 4.7% in 2014. We forecast net margins will remain static as they have for the past 18 months, hovering in the 8.8%-9.0% band through the end of 2014. Given this environment, S&P 500 EPS will rise from $100 in 2012 to $107 in 2013 and $114 in 2014.'
Source: Goldman Sachs
2013 EPS: $106.25
Strategist: Brian Belski
Comments: 'Admittedly, we are forecasting relatively low rates of earnings growth for 2013 given our price forecasts,' he writes. 'Our reasoning is that the productivity well has all but run dry and current peak profit margins are set to decline, putting some downward pressure on earnings growth unless global demand picks up again.'
Source: BMO Capital
2013 EPS: $108
Strategist: John Stoltzfus
Comments: 'We continue to believe that prospects remain good for economic growth to reassert itself as challenges are persistently met by concerted efforts of country officials and central bankers around the world aided and abetted by secular trends larger than the cyclical hurdles in the immediate path. We expect the process of fostering an economic recovery from the grips of a global financial crisis will persist and ultimately prove successful. We believe that the performance of the equity market stateside, and increasingly the performance of stock markets outside the US as well, point to that end. Equity markets are historically known to be discounting mechanisms for what lies ahead.'
2013 EPS: $110
Strategist: Savita Subramanian
Comments: 'The path to our 2013 year-end S&P 500 target of 1600 is not a straight line, and we remain somewhat cautious on US equities in the near term, as the US Fiscal Cliff and the growth outlook for Europe and China remain overhangs. But we expect to be in a better place by mid 2013, as BofAML economists expect a bottoming in China growth, reduced tail risk from Europe, and a multi-stage fix to the Fiscal Cliff.'
Source: Bank Of America Merrill Lynch
2013 EPS: $108
Strategist: Tobias Levkovich
Comments: 'A plausible shift towards The Raging Bull thesis outlined last December remains intact. The Raging Bull argument highlighted growth drivers such as the energy sector's expansion, US manufacturing competitiveness, the explosive penetration of IT mobility and a housing rebound, combined with some positive demographic shifts for baby boom echo savers and more fiscally responsible behaviour out of politicians.'
2013 EPS: $106
Strategist: Stephen Auth
Comments: 'He's betting investors eventually will return to the market in force as concerns about global growth ease. 'A pullback of 5% to 10% is coming,' says Auth, who would view such a selloff as an opportunity to invest at lower prices. The market multiple, he says, could expand later if the 'risk environment' improves.'
2013 EPS: <$100
Strategist: Byron Wien
Comments: 'A profit margin squeeze and limited revenue growth cause 2013 earnings for the Standard & Poor's 500 to decline below $100, disappointing investors. The S&P 500 trades below 1300. Companies complain of limited pricing power in a slow, highly competitive world economic environment.'
2013 EPS: $107
Strategist: Henry McVey
Comments: 'In addition to forecasting positive earnings growth this year (which we did not in 2012), we are also using a slightly higher multiple to reflect the positive impact of heavy central bank intervention on the equity risk premium.'
2013 EPS: $107
Strategist: Ed Yardeni
Comments: 'Stocks remain relatively cheap. Since the start of the bull market, valuations have been held down by fears of a double dip in the US, a hard landing in China, and a meltdown in Europe. If these concerns diminish this year, as I expect, there is room for higher multiples, especially for the S&P 500 (selling at 13.1 times forward earnings on Friday) as well as the S&P 400 (15.3) and the S&P 600 (15.9).'
2013 EPS: $--. 'According to our models, the US equity market is presently discounting 5%-6% inflation for the next 12 months, which seems very extreme to us.'
Strategist: Richard Bernstein
Comments: 'We continue to believe that US equities are in the midst of a major bull market that could ultimately rival 1982's bull market...US corporate profits continue to be the healthiest in the world.'
Source: Richard Bernstein Advisors
2013 EPS: $--. 'My sense is that earnings and the economy will limit the upside and ongoing Fed liquidity support will provide a cushion.'
Strategist: David Rosenberg
Comments: 'I think it will be a flat year for the broad equity markets in 2013 but what worked in 2012 should work in 2013, namely 'safety and income at a reasonable price' or SIRP... Within the equity market, to me it is again going to be about screening for dividend growth, yield and coverage in sectors with defensive characteristics.'
Source: Gluskin Sheff
2013 EPS: $--, 'This path leads to very sluggish GDP, on the border of a recession, and an accompanying weak earnings picture as well.'
Strategist: Jeff Kleintop
Comments: 'In 2013, it will likely be the change in valuation that drives most of the performance of stocks, and the sentiment shift and willingness to take on risk reflected in that movement will be meaningful for bonds as well. The direction of the markets in 2013 may be more about feelings than facts.'
Source: LPL Financial
2013 EPS: < 5% year-over-year growth
Strategist: Scott Wren
Comments: 'I don't think that consumers are going to step up to the plate. I think that business investment is going to be low. But I do expect Chinese growth to be better.'
2013 EPS: $--.
Strategist: Jeffrey Gundlach
Comments: 'One thing is clear that this is the beginning of an attempt to bring the fiscal deficit under control or at least start to address it. When you raise taxes and when you cut spending, whatever the combination is going to be, you will have headwinds for the economy. The economy is really being supported--this isn't just in the United States, it's in Japan, the ECB and Britain--the economy is being supported by quantitative easing that is allowing for a massive budget deficit and money printing exercises to go on…As you address the fiscal problems, you are going to have weak economic growth. What that means is that you are in an environment that is going to have further trouble in terms of investment returns that are in areas that are based on economic growth and areas that do relatively well like bonds…Broadly speaking, I think that investors should be looking for lower prices on most risk assets in these developed countries with the exception of Japan.'
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