'This may be the most widely anticipated recession in recent memory' - Citi

Scott Chronert, Citi U.S. equity strategist, is growing more positive on stocks as he believes earnings will be more resilient relative to prior recessions.

As a result, Chronert reiterated his S&P 500 targets: 3700 (mid-year) and 4000 (year-end). Citi urges investors to buy below the former and sell above the latter.

“This may be the most widely anticipated recession in recent memory,” Chronert wrote in his outlook update note.

These price targets are based on Citi’s base case that projects a mild recession, a scenario to which a 65% possibility is assigned. A soft-landing scenario (20% chance) could see the S&P 500 finish the year at 4500 while a hard landing (15%) could push it all the way to 3200.

The strategist also lowered the S&P 500 earnings estimate for 2023 to $213 from $216 on mild recession. Chronert also adds that a consensus of 12% earnings growth in 2024 may be unrealistic. Instead, he expects the S&P 500 earnings to grow 6% next year.

The S&P 500 closed at $3,960.28 yesterday.

By Senad Karaahmetovic

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