Strategists at Deutsche Bank increased their target for the end of the year to 5,500, compared to the previous 5,100.
The review is based on a strong earnings cycle and the expectation that market confidence will grow by the end of the year, which should positively impact US stocks.
“We see the earnings cycle as having a lot of legs,” the strategists said in a note to clients on Friday.
“Although all the growth may not come this year, we see market confidence in a continued recovery rising by the end of the year, supporting equity multiples.”
However, strategists also warned of potential market volatility due to geopolitical risks. Furthermore, they warned that the pending elections pose a “real risk” to markets.
The financial brokerage company indicated that although growth may not be achieved this year, market confidence in the continued recovery is expected to rise by the end of the year. This sentiment is expected to be supported by stock multiples.
Along with the revised index target, Deutsche Bank also raised its base case for S&P 500 earnings to $258 per share from the previous estimate of $250. This revision indicates annual growth of 13%.
If macroeconomic growth continues to outpace trends as it has over the past seven quarters, strategists suggest earnings could reach $271 per share, representing the upper end of their original forecast range of $250 to $271.