The targets range from 6,400 to 7,007. This implies returns between +5% and +15% from Friday’s close. It’s a tighter range than last year’s targets, with many clustering in that 8%-10% return expectation.
Before we move on, I’d once again caution against putting too much weight into one-year targets. It’s extremely difficult to predict short-term moves in the market with any accuracy. Few on Wall Street have ever been able to do this consistently. DataTrek’s Nicholas Colas recently pointed out that the standard deviation around the mean annual total return for the S&P 500 is nearly 20 percentage points! More here.
I do however think the research, analysis, and commentary behind these forecasts can be very informative.
In summary: The fundamentals supporting earnings growth are firm. Valuations are above historical averages but are not cause for alarm. As usual, there’s plenty of uncertainty. But on balance, the outlook for stocks is favorable.
Below is a roundup of 14 of these 2025 targets for the S&P 500, including highlights from the strategists’ commentary.
UBS: 6,400, $257 earnings per share (as of Nov. 18): “After a rally this year through Trump’s cabinet appointments, we see mild downside in equities in H1 next year amid a step down in US growth. Once earnings estimates have fallen to more realistic levels, H2 ’25 should be better.”
Morgan Stanley: 6,500, $271 (as of Nov. 18): “Looking forward to 2025, we think it will continue to be important for investors to remain nimble around market leadership changes, particularly given the potential uncertainty that the recent election outcome introduces. This is also a reason why we are maintaining a wider than normal bull versus bear-case skew — base case: 6,500; bull case 7,400; bear case 4,600.”
Goldman Sachs: 6,500, $268 (as of Nov. 18): “We estimate net margins will expand by 78 bp to 12.3% in 2025 followed by a further 35 bp increase to 12.6% in 2026. Our economists assume the Trump administration will impose targeted tariffs on imported automobiles and select imports from China. They…
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