- Screengrab via Bloomberg
A little over a month after setting a 2016 year-end price target on the S&P 500, RBC’s Jonathan Golub is already scaling back his call.
Because, when the the facts change, one changes one’s mind.
“On November 20, we published our 2016 outlook with an S&P 500 price target of 2,300,” said Golub, RBC’s chief equity strategist. “Since that time, WTI has fallen by nearly 10% and bottom-up analyst estimates for 2016 have fallen by 1%. Further, economic trends have softened, with the November ISM at 48.6, well below the 53.7 average of the past 3 years.”
Golub now sees the S&P ending the year at 2,225.
It’s pretty unusual to see a revision so soon, partly because it’s understood that things like commodity prices and economic data can be noisy and volatile in the short-term.
But the myriad of negative headlines and magnitude of the moves seem to be significant enough that at least one Wall Street pro is willing to make a tweak.
In a brief note, which he circulated on Thursday, Golub cut his 2016 and 2017 estimates for S&P earnings per share to $124 and $133, respectively, from his earlier estimates of $128 and $137.
“We see two primary risks to our thesis – oil and the Fed,” Golub said. “Oil: lower or sustained, depressed WTI prices represent downside risk to our forecast. The Fed: failure of the Fed to successfully move the Funds rate higher would negatively impact market sentiment and stock valuations.”
Now, the question is: Who’s next?