Wall Street is Chasing Stocks Higher: Morning Brief

Starbucks (SBUX) has released a new product for the people, the pumpkin spice latte. The chain is now making noises with the holiday-themed cups. All the strategists of Wall Street have been religious in accepting that the stock market will be bullish in the coming days.
In the last 30 days, not more than four listed firms on the S&P 500 have revised their price targets for this and the next fiscal year. This comes after the fact that all that has been conducted in the last month is generally conducted in the month of November, but it looks like the market just can not wait.

On Tuesday, the head of equities strategy of Wells Fargo, Chris Harvey, raised the firm’s price target from 3850 to 4825. This move was then followed by David Lefkowitz, the equity strategist at UBS who raised his prie targets from 4500 to 4600.
The S&P closed at a staggering 4846 on Tuesday.

Lefkowitz has also raised his June 2022 target from 4650 to 4800. He made headlines when he announced that he is looking at a price target of 5000 by the end of 2022

“Yes, the rally off the COVID-19 bottom in March 2020 has been extraordinary, but we think there are further gains ahead,” Lefkowitz writes. “Solid economic and corporate profit growth, in conjunction with a still-accommodative Fed, means that the environment for stocks remains favorable. As a result of our higher EPS estimates, we raise our targets for the S&P 500 for December 2021 by 100 points to 4,600 and June 2022 by 150 points to 4,800. We initiate our December 2022 target of 5,000, representing about 13% price appreciation from current levels.”

With this vision, Leftkowitz enters the club previously entertained by Credit Suisse’s Jonathan Golub. He was the first one to announce that he is looking at the 5000 price level. The equity strategists at Goldman Sachs also made heads turn with their announcement of the new price targets that reach 4700 from 4300. Their year-end target for 2022 is 4900. Lefkowitz and Golub both look at earnings growth being the driving force behind the rally at the year-end.

“Our price targets assume a forward P/E multiple of about 20x, slightly below current levels of 21x,” Lefkowitz adds. “We expect valuations to remain above historical averages mostly due to the very low interest rate environment. Said another way, stocks continue to look appealing relative to bonds.”

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