Evercore ISI Chief Stocks and Algo Strategy Analyst Julian Emanuel has raised his year-end forecast for the S&P 500 index to 6,000. This is currently the highest target price on Wall Street.
Boosted by the AI boom this year, the S&P 500 index has repeatedly hit record highs, and the target prices shouted by Wall Street bigwigs have also been getting higher and higher.
Following UBS's high target price of 5600 points, Julian Emanuel, the chief stock and quantitative strategist at Evercore ISI, one of the most closely-watched stock strategists in the media, has raised his year-end forecast for the S&P 500 index to 6000 points, the highest among them and about 10.5% higher than the closing level of the S&P 500 index last Friday.
Emanuel, who was once one of Wall Street's most famous bears, previously predicted that the index would close at 4750 points this year. However, he now predicts that the S&P 500 index will once again see a double-digit increase by the end of 2024.
Investors' optimism about economic resilience, corporate profit improvement, and the end of the Fed's tightening cycle has pushed the S&P 500 index up more than 14% this year. Emanuel said that receding inflation and enthusiasm for AI will further boost the stock market.
His latest forecast is higher than the target prices of David Kostin of Goldman Sachs, Jonathan Golub of UBS, and Brian Belski of BMO Capital Markets, which are all set at 5600 points. Currently, JPMorgan seems to be the only 'bear' on Wall Street, with a target price of 4200 points, which means the index will fall more than 20% from last Friday's closing level.
In a report to clients last Sunday, Emanuel wrote, "The pandemic changes everything. Record stimulus, high cash balances, and low leverage support consumers. Then there's AI. Today, the potential of Generative AI is changing every job and industry."
"Inflation slowdown, Fed interest rate cuts, and the background of economic growth support the 'golden girl' scenario," he added. "Golden girl" economy usually refers to an economy where high growth and low inflation exist simultaneously.
Emanuel also raised his expected EPS for the S&P 500 index to $238 and $251 for 2024 and 2025 respectively, with a year-on-year growth rate of 8% and 5%.
He also said that assuming the S&P 500 index jumps to 6000 points by the end of December, with EPS of $238, the index's PE ratio would rise to 25 times, still below the peak of the dot-com bubble at 28 times. He added that the S&P 500 index's PE ratio may remain high for a "long period of time".
He also believed that by the end of 2025, the S&P 500 index could rise to 7000 points.