BofA Throws In The Cautionary Towel: Raises S&P Price Target From 2,300 To 2,450

With the S&P 500 rapidly running away from the 2,300 bogey, which has been the year-end price target for most sellside strategists, analysts on Wall Street had two choices: either urge their clients to sell, or raise their target. Overnight, Bank of America’s Savita Subramanyan became the first in recent weeks to throw in the cautionary towel, and raised the bank’s year-end S&P price target from 2,300 to 2,450 to “reflect an increasing likelihood that we are entering the typical later stages of a bull market, during which fundamentals typically take a back seat to sentiment and technicals.”
Nonetheless, she does attempt to and adds that “typically, in the later stages of a bull market, corporate earnings are cyclically elevated and the multiple that the market assigns to those earnings is often elevated as well. As a result, market prices can become significantly overvalued relative to their intrinsic fair value, and this divergence can last for years. Thus, we would highlight the distinction between our year-end target of 2450 (driven largely by sentiment and technicals) and our estimated intrinsic fair value of 2230.”
In any event, it is clear that to avoid a client rebellion, BofA had no choice but to go with the number that is driven by “sentiment and technicals” and not with what makes fundamental sense.

This post was published at Zero Hedge on Mar 1, 2017.