Photo: Bloomberg TV
As the year enters its final month, we expect Wall Street’s research departments to start dumping their 2013 outlooks in droves starting next week.
According to our count, at least 9 top equity strategists have already published their full or partial outlooks. Names include Goldman, Morgan, UBS, and Bank of America Merrill Lynch.
All of them warn that their outlooks could change dramatically depending on the outcome of the fiscal cliff talks.
For now, their average year-end target for the S&P 500: 1,540 on $107 of EPS.
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.'
Source: Deutsche Bank
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: $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: $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.'