Oppenheimer chief investment strategist John Stoltzfus is in rarified air on Wall Street entering the New Year.
The long-term market forecaster now sports the most bullish price target on the S&P 500 amongst his peers, eclipsing the always optimistic Brian Belski at BMO Capital Markets. Stoltzfus — who has spent 38 plus years on the Street — sees the S&P 500 climbing 14% to 5,330 by the end of 2022. Belski forecasts S&P 500 5,300.
Through Wednesday, the S&P 500 is up 24% year-to-date.
“We expect a certain element of slowing in segments of the economy shuttered or partially shuttered [because of the pandemic]. But we have technology and science that brought us to the dance, and they will take us out of the dance when it comes to the normal,” Stoltzfus explained on Yahoo Finance Live on his upbeat call for stocks.
Stoltzfus believes that despite the ongoing threat of the pandemic, a still supportive Federal Reserve and resilient companies will help drive strong earnings next year. In turn, that will help power stock prices, says Stoltzfus.
Indeed, Stoltzfus’ prediction isn’t widely shared on the Street.
For instance, Morgan Stanley’s chief investment officer Mike Wilson is looking for the S&P 500 to finish next year at 4,400. Today, the index trades at nearly 4,700. Wells Fargo’s Chris Harvey also has a somewhat more muted outlook, coming in at an S&P 500 price target for 4,715 to end 2022.
The average S&P 500 target for 2022 is 4,950, according to Bloomberg data.
“We believe it is time to move up in quality and down in risk; at a ~20x forward P/E, we have a peak-ish multiple on peak growth — not exactly a heavenly match. The Fed has turned hawkish; we are seeing pricing fatigue; growth is decelerating; market froth is abundant; and risk-averse options are relatively cheap but limited… so expect pressure on multiples,” said Harvey on his market outlook.
As for Stoltzfus, he says his more bearish peers are missing a few things.
“We think that their [his peers] call right now is similar to the fourth quarter of 2018, and it was the wrong call,” Stoltzfus says, pointing to the Fed not blindly raising interest rates back then.
“We think the Federal Reserve remains highly sensitive. This is not an Alan Greenspan Federal Reserve where they would slam on the brakes or flood the system with liquidity, either/or. This is Ben Bernanke’s legacy to Janet Yellen and to Jerome Powell. We believe he is not the greatest communicator in the world, he is a little stiff. But, we think he is a straight shooter and very sensitive, and we think the whole Fed is,” added Stoltzfus.