S&P 500: June 2021 target is 3,300 – UBS

Second-quarter earnings season is officially underway with results from 13% of the S&P 500 market cap. Initial results confirm the view of analysts at UBS that 2Q marked the bottom for corporate profits and earnings are beginning to climb higher. The S&P 500 target is still sit at 3,300.

Key quotes

“We expect profits to be down 40% in 2Q. However, as we expected, many management teams continued to emphasize that the outlook remains uncertain and is highly contingent on progress containing the coronavirus and additional government stimulus.”

“Our S&P 500 EPS estimates of USD 122 (-26%) and USD 156 (+28%) for 2020 and 2021, respectively, remain unchanged. Overall, results should help sustain the rally we have seen over the last four months. Our June 2021 S&P 500 price target remains 3,300.”

“In April, we estimated that S&P 500 dividends would decline by 6-8% in 2020. As of the time of this writing, 58 companies have cut their dividends, trimming S&P 500 dividends by 5.5%. Our initial estimate still looks good, considering that the vast majority of dividend cuts are now likely behind us.”