UBS has adjusted its price target for the S&P 500 for 2025, increasing it by 8% to 6,400. This adjustment reflects a positive outlook for economic conditions and earnings growth.

Price Targets

UBS has raised its target for 2024 to 5,850, indicating a positive near-term outlook. UBS strategists anticipate a 9.2% increase in the index over the next 15 months, driven by robust earnings growth and improving economic indicators.

Earnings Projections

The forecast for earnings per share (EPS) is set at $240 for 2024, $257 for 2025, and $275 for 2026. These projections are lower than consensus growth estimates.

Economic Outlook

UBS economists expect nominal GDP growth of 3.7% in 2025, with real GDP growth projected at 1.6%. This economic backdrop is further supported by anticipated monetary policy adjustments, including rate cuts.

Factors Supporting S&P 500 Performance

Several factors are expected to support the performance of the S&P 500, including revenue growth, stability of profit margins, lower interest rates, and stock buybacks. Valuations are expected to rise with rate cuts.

Potential Risks

However, there are potential downside risks, such as a resurgence in inflation, that could impact projections. The interplay between inflation, interest rates, and market performance remains a critical area of focus.

Conclusion

The ability of the Federal Reserve to navigate these challenges will be pivotal in shaping investor sentiment and market dynamics. In summary, UBS's revised targets for the S&P 500 reflect a cautiously optimistic outlook, supported by anticipated earnings growth and favorable economic conditions.