Boa Sets A New Eps Target

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Boa Sets A New Eps Target

Bank Of America (Boa) Sets A New Eps Target For S&Amp;Amp;P 500

The analysts at Bank of America have raised the S&P 500's EPS target for the year 2024. Earlier, they had set a target of $235, which has now been raised to around $250 (a change of + $15).

With this new change, the Bank of America's target has become the highest in the entire Wall Street. In terms of y/y upside, this represents a change of +12%.

Gdp Target Raised To 2.7%

According to BoA, the Q4 results of the S&P 500 listed companies have given another bullish surprise. This has forced the BoA to also raise the GDP forecast for the year 2024 to around 2.7% from an earlier target of 1.4%.

An increase of around 1.3 ppt in the GDP means an increase of 5 ppt in the EPS growth. The BoA economists also added that corporate America went through a transition in 2023. As a result, it makes sense to set higher targets amid the tepid demand environment seen in the USA.

The forecast framework of BoA shows that the EPS growth showed a change of -3 ppt in 2023, but it will swiftly recover in the year 2024.

As for the year 2025, the Bank of America's analysts have set their eyes on $275. When compared with this year's forecast of $250, this shows a change of +$15.

Another noteworthy forecast made by the bank was related to the hyper scalers such as Meta, Amazon, Microsoft, and Alphabet. According to the bank, these companies will spend $180 billion in terms of capital expenditures during the current year.

On a y/y basis, that's a change of almost +27% and suggests that the year 2024 will also be a good one for the tech companies. This also highlights that these companies will also increase their capital spending as well.

If we look at history, it appears that firms that are in the reinvestment cycle usually underperform. But this time, the investments are made in AI, which gives rise to a virtuous cycle.

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