Wednesday, 20 September, 2023

BofA Quant Strategists Lift S&P 500 End-2023 Target to 4,600

Quantitative strategists at BofA raised their year-end target for the S&P 500 to 4,600 from 4,300, saying that the net message of the bank’s five indicators — including on the macro cycle, valuations and positioning — is bullish.
  • New target implies about 3.5% upside from Tuesday close
  • Strategists led by Savita Subramanian also note that “AI is part of this,” as well as automation and labor efficiency
  • They see better returns for the equal-weighted S&P 500 than the market-cap weighted index
    • Equal-weighted S&P 500 has lower EPS volatility and estimate dispersion, and is cheaper and less crowded, they write in a note
    • The past nine “recovery” cycles have seen the equal-weight index almost always beat the market-cap weighted index
  • NOTE: Subramanian had correctly predicted the stock slump last year and was one of the first Wall Street strategists to turn bullish in 2023