RBC Cuts Its 2022 S&P 500 Price Target to 3800, Expects Stocks to Recover Next Year

By Senad Karaahmetovic

RBC Capital Markets strategists slashed the firm’s year-end 2022 price target to 3,800 from the prior 4,200 to reflect lowered EPS forecasts.

RBC now expects S&P 500 EPS to come in at $216, down from $218. Calvasina has been below consensus on S&P 500 EPS forecast in recent months.

For 2023, the S&P 500 projections are down to $208 from $212. Based on this forecast, Calvasina introduced a new, preliminary target for the S&P 500 of 4,100 for 2023.

“We expect conditions to remain choppy over the next few quarters but anticipate recovery in 2023 as a whole,” the strategists said in a client note.

Calvasina also notes that a Q3 reporting season is “off to a rough start” while downward revisions on the sell-side “don’t seem deep enough just yet.”

“The good news is that stocks tend to bottom ahead of the end of the downward earnings revision cycle and concerns about inflation and supply chains as well as expectations regarding pricing may have peaked,” she added.

The strategists also see a case for Small Cap stocks to outperform again.

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