BAS-ML's Chief US Equity Strategist Raises 12-Month S&P 500 Target to 1200

Today, Bank of America Merrill Lynch's chief US equity strategist David Bianco raised his 12-month price target on the S&P 500 (NYSE: SPY) to 1200, saying the US economy has just started a slow but sustainable recovery that will keep inflation and interest rates low.

Bianco's 1200 S&P 500 target represents 17x their 2010 EPS estimate and 15x their 2011 EPS estimates. The 1200 target is 15.8x BAS-ML's "normalized" 2010E S&P 500 EPS of $76.

Today the S&P 500 closed at 1,025, providing 17% upside to Bianco's new target.

Notably, Bianco states the S&P will hit 1200 without the US consumer leading the charge. Instead, Bianco see the recovery led by "late-cycle" parts of the economy, such as business spending, infrastructure investment, rising commodity prices and exports. Explaining this Bianco said "this may seem to contradict logic, but it represents emerging economies taking the baton from the US in leading global economic growth. This is a very encouraging development for the global economy and the big companies of the S&P 500."

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