Despite a more mixed macroeconomic picture, we see five factors that offer robust support for new ATHs on the SPX in the near future.
1/ Solid support from earnings: Now 83% of S&P500 have reported and 79% of them beat EPS expectations. Q1 saw rising profit margins and EPS revisions have improved. 12-month forward EPS hit a new high for the SPY at $255.
This will result in mid-single-digit P/E by 2025-26e. Here’s how.
Q3 Sales and Profits beat estimates, but the economic downturn affects demand. In 2025, we assume an economic recovery leading to a double- digit underlying profit growth. We expect dividend policy payouts each year in 2024-26.
Model Portfolio now up 28% vs SPX at 17%. Adding SK Hynix as HBM chips are next in line to benefit from AI's explosive growth. With a strong market lead and high margins, SK Hynix is positioned for growth.
While AI has driven rapid gains in semiconductors, its impact on the real economy is lagging, especially in biotech. Here, we present an equal-weighted basket of seven biotechs, up 38% in the past year, including Alnylam and Sarepta, expected to benefit from AI in 2025.