Oppenheimer no longer expects the S&P 500 finish the year above 5,000, but is still counting on a big second-half rally.
Strategist John Stoltzfus on Thursday cut his Street-high S&P ( SP500 ) ( NYSEARCA: SPY ) to 4,800 from 5,330. That would be a gain of about 24% from where it trades this morning .
It was only Tuesday that Stoltzfus stuck with his 5,330 forecast, noting that while the broader market saw its worse first-half performance since 1970, there was actually a strong rally to close out that year .
That same day, Credit Suisse strategist Jonathan Golub cut his target to 4,300 from 4,800.
Oppenheimer's new target "is based on our earnings projection of $230 per share for the S&P 500, which is unchanged from our previous forecast and which, coupled with our revised target, implies a price/earnings multiple of 20.9x," Stoltzfus wrote in today's note.
The 5,330 target "seemed reasonable as the S&P 500 had performed exceptionally well successfully climbing the proverbial 'wall of worry' in 2020 and in 2021 notwithstanding plenty of challenges and in fact seen the S&P 500 respectively delivering price returns of 16% and 27% for 2020 and 2021 (not including dividends paid for those years and excluding applicable costs)," he said.
"Half as much of a gain in 2022 versus 2021 seemed conservative to us at the time."
He continues to favor cyclicals over defensive stocks.
The revamped allocations are Info Tech ( XLK ), 25%, Healthcare ( XLV ), 13.7%, Consumer Discretionary ( XLY ), 12.5%, Financials ( XLF ), 11.9%, Industrials ( XLI ), 9.5%, Communication Services ( XLC ), 9%, Consumer Staples ( XLP ), 5%, Energy ( XLE ), 5%, Materials ( XLB ), 3.2%, Real Estate ( XLRE ), 2.7%, Utilities ( XLU ), 2.5%.
See the UBS list of riskiest defensive stocks .
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Oppenheimer relents and cuts S&P 500 forecast, but still sees 25% upside