Every year we like to compile the S&P 500 predictions from various Wall Street analysts. Below is a chart with each strategist’s prediction for 2021 as well as their prediction from 2020. Also included is a brief quote that each strategist gave with next year’s target number. The average of all the predictions comes out to an 8.8% gain in the S&P 500 for 2021 with the rollout of vaccines being the major catalyst. We caution everyone to take these numbers with a grain of salt as none of these “experts” have a crystal ball and most of them have been wrong every year.
JPMorgan (Target: 4,400; EPS: $178): ‘One of the best backdrops for sustained gains in years’
Investors are entering 2021 against a confluence of market-positive events, including improving prospects for widespread vaccinations and sustained economic reopening, gridlock in Washington and accommodative central bank policy, said JPMorgan strategists led by Dubravko Lakos-Bujas.
Deutsche Bank (Target: 3,950; EPS: $194): ‘A gradual correction of overvaluation’
Much of 2020’s run-up in the stock market came with multiples expansion, as prices escalated despite a drop in earnings, as companies dealt with fallout due to the coronavirus pandemic.
Next year, as the economy recovers and a vaccine allows for long-lasting re-openings, earnings growth will rebound and multiples will de-rate, according to Deutsche Bank strategist Binky Chadha.
UBS (Target: 4,100; EPS: $176): ‘The key driver of U.S. equities will be the pace of vaccinations’
“The key driver of U.S. equities will be the pace of vaccinations, similar to how shifts in mobility drove equities through the spring and summer,” Parker said in a note. “As people get vaccinated, they are likely to ‘normalize’ spending on areas impacted by COVID shortly thereafter.”
Jefferies (Target: 4,200; EPS $180): ‘The much-maligned value and cyclical growth sectors are slowly making a comeback’
Improving prospects for a vaccine, easy lending conditions and broader participation among cyclical and value stocks will help propel the stock market higher in 2021, according to Jefferies strategist Sean Darby.
Bank of America (Target: 3,800; EPS $165): ‘A lot of optimism is priced in already’
Stocks have already priced in much of the expected recovery in the economy and corporate profitability, leaving just slightly more upside heading into next year, according to Bank of America equity strategist Savita Subramanian.
BMO Capital Markets (Target: 4,200; EPS: $175): ‘Expect another year of double-digit gains’
Heading into 2021, stocks are poised to keep reaping the benefits of the massive infusion of monetary support from the Federal Reserve, along with an anticipated additional round of fiscal stimulus. This constructive policy environment is likely to help push equities higher even as virus concerns linger for at least the first several months of the new year, according to BMO Capital Markets strategist Brian Belski.
Credit Suisse (Target: 4,050; EPS: $168): What the future will look like in the future
Credit Suisse analyst Jonathan Golub introduced his 2021 price target for the S&P 500 (^GSPC) of 4,050, implying 12.2% upside from closing levels on November 17. Underpinning this upbeat call is his assumption that two years from now, the post-virus economic recovery will have already hit a peak.
Morgan Stanley (Target: 3,900; EPS: $193): ‘2021 will be much more about stock picking’
“2020 was all about beta and understanding how equity markets trade in and around a recession that handed us the fattest pitch we’ve seen in a decade,” he added. “2021 will be much more about stock picking (alpha) and should favor those companies that can deliver earnings growth that isn’t already expected or priced.”
Goldman Sachs (Target: 4,300; EPS $175): A vaccine is the ‘more important development for the economy’ than the new administration
The economic reopening coming alongside a vaccine, in tandem with a status quo policy environment cemented with a divided government, will help push the S&P 500 to 4,300 by year-end 2021 and then to 4,600 by the end of 2022, Kostin said. The price target implies nearly 20% appreciation from closing prices on November 13.