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Top Wall St strategist boosts his 2021 S&P 500 target for a second time

Emily McCormick
·Reporter
·2 min read
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At least one Wall Street strategist is getting even more bullish on stocks this year.

On Tuesday, Credit Suisse strategist Jonathan Golub upwardly revised his S&P 500 price target for the second time in two months. This time, he noted that stronger-than-expected corporate profits and upbeat reopening prospects warranted a more optimistic outlook on equities.

The firm's new year-end S&P 500 price target of 4,300 suggests upside of 10.9% from current levels. In January, Credit Suisse saw the S&P 500 ending 2021 at 4,200, and last year expected the index to rise to 4,050.

Golub now expects aggregate S&P 500 earnings per share to grow to $185 and 2021 and $210 in 2022, up from the $175 and $200, respectively, he estimated previously. Companies already entered 2021 with more profit-making momentum than expected, with fourth-quarter EPS topping estimates by 17% and unexpectedly growing on a year-over-year basis, Golub said.

And as vaccines enable the economy to open further, companies should be able to grow results even more, offering further catalysts for their stock prices.

"With the economy reopening, stimulus abundant, and Fed policy uber-accommodative, it is no surprise that 2021 GDP is expected to run hotter than at any time in the past 35 years," Golub said.

The consensus forecast among major Wall Street banks is for GDP to grow by 6.1% in 2021, Golub added. This would mark a sharp rebound from 2020's COVID-induced 3.5% contraction — the worst since 1946.

"Accelerating GDP should result in higher revenues (every 1% in GDP is a 2.5-3% change in sales), and an even greater gain in EPS given operating leverage," Golub added. "Additionally, rising rates — a benefit to Financials — and copper and oil prices — a boon for Industrials, Energy, and Materials — further augment this favorable backdrop."

NEW YORK, NY - SEPTEMBER 28: A view of the bonze Charging Bull on Wall Street stands at a lower Broadway park at Bowling Green September 28, 2020 in the financial district of New York City. (Photo by Robert Nickelsberg/Getty Images)
NEW YORK, NY - SEPTEMBER 28: A view of the bonze Charging Bull on Wall Street stands at a lower Broadway park at Bowling Green September 28, 2020 in the financial district of New York City. (Photo by Robert Nickelsberg/Getty Images)

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck

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