© Reuters. Oppenheimer Says Most Stocks Have Likely Bottomed, Market Could Rally Before Year End
By Senad Karaahmetovic
Chief Investment Strategists at Oppenheimer cut the year-end target for the following to 4000, although they remain bullish on stocks.
The new price target is based on the S&P 500 earnings estimates of $230, implying a P/E multiple of 17.4x,
“We believe US economic fundamentals remain remarkably resilient though challenged in a highly transitional environment by persistent high levels of inflation, increasingly restrictive monetary policy to address the inflation, and supply chain problems that remain as well,” the strategists said in a client note.
The strategists remain positive on equities as some “solid companies” are “grossly oversold.” Given these conditions, the strategists say stocks could stage a “modest” rally before the year’s end.
“We look to the potential for a rally in a number of places including: positive surprises in Q3 earnings season, any reduction in inflation; positive outcomes (perceived or otherwise) from the midterm election in November as well as any progress that develops in addressing Europe’s fiscal and energy challenges. In addition some weakening in the dollar could provide a lift to the US market,” the strategists added.
In a separate note, Oppenheimer argues that the “textbook criteria” has emerged for a market bottom.
“Our feel is that the breadth of stocks has likely bottomed, particularly those with less rate sensitivity,” they wrote.
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