Strategists' Year-End Price Targets Right Where They Started

Below we highlight the year-end S&P 500 price targets of major Wall Street strategists polled each week by Bloomberg.

Since we last updated our table, Credit Suisse, HSBC, and Morgan Stanley have increased their year-end targets. The average price target for all strategists currently sits at 1,050 for the S&P 500. This is 3.77% below the actual level of the index, so strategists as a whole aren't bullish for the remainder of the year.

What's ironic about the current average price target is that it is right at the level it was at the start of the year. As shown below, at the start of 2009, strategists had a target of 1,049.9 for the S&P 500, which would have been a gain of 16.2%. Through the first two quarters of the year, however, strategists lowered their estimates as the market headed lower, and now they've had to raise their estimates as the market has rallied. Their low year-end price target was 944 on June 1st, so they continued to lower estimates well after the market had bottomed in March.

Had they all just held tight, they would have been more spot on and not made themselves look bad in the process.

Comments

[Mark Bern:]

But I have one question. What were the earnings estimates at the beginning of the year compared to current earnings estimates for the year?

Why is this important? Because the index price is a projection of stock values based upon future earnings. The answer is that the earnings estimates are significantly lower for 2009 than they were at the beginning of the year. Also, and perhaps more important, revenue estimates are far lower than they were at the beginning of the year. The economy is not performing as well as expected. Yet, here we are with index levels where expected, even without the fundamental support that was expected.

I suspect that, at some point, we will have to adjust the indexes to reality.

Oct 15 02:38 PM

[Mayascribe:]

Mark: How can earnings not be better? Companies have fired thousands, stripped their inventories to the bone, shipped jobs overseas, and slowed their domestic purchasing. These reports are fundamentally skewed in this "new" economy. But that's the way it is, or, should I bring out the newest, hottest cliche, "it is what it is."

Oct 15 02:56 PM

[Macro_Man:]

the time to buy stocks is when the analysts are all cutting estimates and the time to sell stocks are when the upgrades are at the zenith. Watch out if more analysts hike their estimates

Oct 15 05:00 PM