U.S. investment bank Morgan Stanley (MS) has issued a new bullish target for the S&P 500 stock index.
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In a new report, Morgan Stanley raised its rating on U.S. stocks to a Buy-equivalent “overweight” and said that the benchmark S&P 500 could rise 25% from current levels and reach 7,400 in 2025. That’s a significant upgrade from the bank, which in June of this year had forecast that the S&P 500 would be at 5,400 by the end of next year.
The bank’s previous bull case had called for the benchmark index to reach 6,350 during 2025 before pulling back. In its new report, Morgan Stanley said that a combination of strong corporate earnings and positive macroeconomic conditions should sustain the current stock market rally throughout 2025.
Corporate Earnings Remain Strong
The analysts at Morgan Stanley, led by Chief Investment Officer Mike Wilson, said that the multiple on 12-month forward earnings in the U.S. will contract slightly to 21.5 from 22.2 but remain at a premium to the 10-year average. The bank expects 13% earnings per share (EPS) growth in 2025 and a 12% gain in 2026.
Continued interest rate cuts will also provide a tailwind to equities throughout 2025, noted Morgan Stanley. Looking outside the U.S., Morgan Stanley is also bullish on Japanese stocks moving forward. However, the investment bank sees continued downward pressure on oil prices and expects Brent crude, the international standard, to be around $66 a barrel at the end of next year.
MS stock has risen 50% so far in 2024.
Is MS Stock a Buy?
The stock of Morgan Stanley currently has a consensus Moderate Buy rating among 15 Wall Street analysts. That rating is based on six Buy and nine Hold recommendations issued in the last three months. There are no Sell ratings on the stock currently. The average MS price target of $125.75 implies 6.66% downside risk from current levels.
