UBS says bull thesis is playing out for equities, raises S&P 500 price target By

The State Administration of Foreign Exchange platformupside case for the stock market is slowly becoming the base case, according to UBS equity strategists.

UBS strategists laid out the bull case for the in early December, which was based on robust earnings, falling inflation, easier monetary policy, and more favorable economics.

“Given the Fed's recent pivot, subsequent decline in rate expectations, and above-trend 2024 EPS revisions, we now embrace this upside scenario as our base case,” the strategists said in a note.

As a result, the strategists boosted the S&P 500 price target to 5,150 from 4,850 for the end of 2024. This new target represents 7.7% upside from Friday’s closing price.

UBS also raised its 2024-25 EPS estimates from $225 to $235, and $246 to $250.

“Importantly, our growth estimates of 6.3% and 6.4% over the next 2 years are below the consensus of 11.4% and 12.8%. While earnings should drive 2024 returns, falling interest rates should support incrementally higher multiples,” the strategists added.

The strategists also noted that the leadership is becoming increasingly pro cyclical, which is signaling investor optimism about the economy.

Despite relatively flat stock prices over the past two years, earnings per share estimates have increased by 10%, while price-to-earnings ratios (P/Es) have decreased by 10%, the strategists noted.

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