• Firm lifts 12-month estimate to 2,200, implying 0.7% gain
  • Strategists surveyed by Bloomberg see index declining by 2017

Fresh records in U.S. stocks are getting harder for strategists to ignore.

Wells Fargo & Co. became just the second of 21 firms tracked by Bloomberg to raise its target for the S&P 500 Index since the measure surged past the group’s average year-end prediction a month ago. Gina Martin Adams, the bank’s chief U.S. equity strategist, now expects the benchmark for American equity to climb to 2,200 in 12 months, implying a 0.7 percent advance from its level of 2,185 on Thursday.

While strategists have normally been among the market’s biggest cheerleaders, a year of stagnating earnings, inflated valuations and confusion about the Federal Reserve has left prognosticators playing an unfamiliar role as bears. The group held fast to an average year-end target near 2,150 even as the S&P 500 rallied 9 percent in six weeks and ended a yearlong stretch without a record. Weedon & Co.’s Michael Purves was the first upgrade after the U.K. secession vote, lifting his target by 100 points to 2,250 on July 28.

Martin Adams said corporate profit growth that slowed less than forecast signals a “better earnings trend” that, coupled with an improvement in the economy, will push stocks higher. While analysts predict a sixth consecutive quarter of slowing profits, they are pricing in a sharp rebound for the final quarter of 2016 that will invariably send the market higher, Adams wrote in a note to clients on Thursday. She kept her profit target for the S&P 500 unchanged at $124 a share over the next 12 months.

“This increase was mainly caused by an adjustment to our fair value estimate for PE because of how well corporate credit spreads have done,” said Martin Adams, an equity strategist at Wells Fargo Securities LLC. “We initially anticipated that the credit spreads would taper off, but the rally we’ve seen so far warranted a shift in our estimate.”

While Martin Adams’ revision, her first in 2016, puts her as the sixth most bullish in the Bloomberg survey, her horizon now stretches seven months farther than her peers and implies meager growth over 12 months for a market that’s more than tripled during a seven-year bull run.

Still, it highlights the current pessimism among equity strategists, whose average target implies a drop of 1.6 in the final five months of the year. When the S&P 500 topped the average estimate level in July, it was the first time since 2014 that the benchmark has been above analysts’ forecast. The group hasn’t adjusted after rushing to cut targets in the first two months of the year, with at least eight lowering estimates as stocks tumbled 11 percent in six weeks.

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