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Deutsche Bank: 0% Upside To S&P 500 "Fair Value" From Here

Tyler Durden's picture




 

While the S&P is now trading several points above the Goldman 2015 year end target of 2100 (and about 95 points away from the FDIC-backed hedge fund's 2016 year end target of 2200), it is not just Goldman which sees no upside from here. As the table below shows, when the S&P was at 2088 few days ago, Deutsche Bank forecast 1% upside left until the end of the year. Which means that all else equal, absent a miraculous surge in corporate earnings by the end of the year or some inexplicable reason to push S&P multiples even higher (the GAAP P/Es is now 20x), the S&P which is now trading at 2105 has precisely 0% upside left based on non-GAAP PE "fair value" of 17.6x.

From DB:

Our sector fair value estimates are based upon the same intrinsic valuation model which we use for the overall S&P 500. It shows the most upside at Health Care, Utilities, Telecom and Tech – four of the sectors we overweight. Tech upside would be 13% if 5.25% real cost of equity was used, or 19% at 5.00% real CoE. This implies fair value sensitivity per 25bps real CoE change is ~5%.

More importantly, those chasing every dip in energy may want to read this: "We raised the growth premium at Energy to 0% from -5% as we see a milder than 20% downside for the sector through 2015 year-end. A 0% growth premium implies 16% downside from here and 19.1 fair value PE at 2015 year-end."

And in table format:

 

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Fri, 02/20/2015 - 15:47 | 5808976 Dr. Engali
Dr. Engali's picture

Yeah, rigggghhhhttttt. Whatever, BTFD.

Fri, 02/20/2015 - 15:55 | 5808998 Cognitive Dissonance
Cognitive Dissonance's picture

That's it, we've reached Nirvana. Everyone shut down their trading platforms and let's all get smashed tonight. The party is at Yellen's with a drive by egging of helicopter Ben's place starting at 2 AM.

Fri, 02/20/2015 - 15:57 | 5809012 clade7
clade7's picture

Party at Yellens?  Thats sort of like the 69 position, drinks are free but the view is awful!

Fri, 02/20/2015 - 16:01 | 5809031 kliguy38
kliguy38's picture

You get Yellen and I'lll take the drinks

Fri, 02/20/2015 - 16:27 | 5809230 ukspreads
ukspreads's picture

Then, buy the NIKKEI - Cheap at 15 year highs Zzzzzzz

Fri, 02/20/2015 - 16:32 | 5809259 Bloppy
Bloppy's picture

Then they'll just raise the S&P target Monday to something even higher. This never ends.

 

Did paper change its Iraq coverage to suit Apple Computer?

http://tinyurl.com/p6gtagg


Fri, 02/20/2015 - 16:52 | 5809410 venturen
venturen's picture

Dips are outlawed....BTFAH!

Fri, 02/20/2015 - 15:51 | 5808991 yogibear
yogibear's picture

What garbage.

Fri, 02/20/2015 - 15:54 | 5808999 Tsar Pointless
Tsar Pointless's picture

HAHAHAHAHAHAHA! Wait a minute,sorry. HAHAHAHAHAHAHA! I have to collect myself here. HAHAHAHAHAHA! Hold on, just a second...

HAHAHAHAHA! I needed a good laugh. Sorry. This is better than any sitcom on teevee or any stand-up comedian.

HAHAHAHAHAHAHAHAHA!

BTMFATH, bitchez!

Fri, 02/20/2015 - 15:54 | 5809002 SheepDog-One
SheepDog-One's picture

So then count on at least +50% for S&P from here.

Fri, 02/20/2015 - 15:55 | 5809004 clade7
clade7's picture

Habba zigga heard das Deutsche's band?  mit a zig, mit a zang, mit a zigzag zigzang boom!

 

apologies to the 'Producers'

Fri, 02/20/2015 - 15:56 | 5809010 Osmium
Osmium's picture

Fair Value?  WTF is that?

Fri, 02/20/2015 - 15:59 | 5809016 101 years and c...
101 years and counting's picture

about spx 800.

Fri, 02/20/2015 - 15:59 | 5809019 Osmium
Osmium's picture

Ah, Thanx!

Fri, 02/20/2015 - 16:20 | 5809158 KnuckleDragger-X
KnuckleDragger-X's picture

Whenever I hear the word 'fair' I automatically add the words "to me" since that's what they mean.....

Fri, 02/20/2015 - 15:59 | 5809018 nakki
nakki's picture

Based on extend and pretend everything is truly amazing. Where does GAAP and NON GAAP come into play in a NON MARK-TO-MARKET world?

Fri, 02/20/2015 - 16:00 | 5809024 SheepDog-One
SheepDog-One's picture

'Miraculous inexplicable reason for more surge'....we haz it, 'FED'!

Fri, 02/20/2015 - 16:08 | 5809056 thismarketisrigged
thismarketisrigged's picture

the s&p real value is fucking 100 and that is being generous.

 

 

the most fucking mainpulated index on the planet.

Fri, 02/20/2015 - 16:14 | 5809100 TheRideNeverEnds
TheRideNeverEnds's picture

Meanwhile, back in reality....  the S&P is going up at a near 70 degree angle.  all offers are being met with frantic bids.

 

The question is not will the market go higher from here; that is a given.  The question is how much higher will it go this year.  another 10, 15, 20%?  more?  

Fri, 02/20/2015 - 16:44 | 5809348 Hohum
Hohum's picture

Maybe.  But the S&P went up almost 25% in 2013, half that in 2014.  2015 has a long, long way to go.

Fri, 02/20/2015 - 17:34 | 5809654 LooseLee
LooseLee's picture

Volume is abysmal, Fool. Maybe you were not around in 1999 right before the market tanked. There were Bulltard Fools everywhere saying the very same things you are now saying. Many of you retards are going to repeat the same mistake---thinking you are cute and have an upper hand now. Fact is, the value of all paper assets will revert to the mean. That is an economic law. So, enjoy your phony fiat 'wealth' while you can. Soon it will evaporate quicker than you can log-on to your Etrade account...

Fri, 02/20/2015 - 16:41 | 5809323 prudent_investor
prudent_investor's picture

Was it serious for tech sector Cost of equity of 5%:)?????? So tech secotr is just only 3% riskier than US TSY yields??

 

Here is a fair value estimates for some Tech stocks: http://prudentvalueinvestor.blogspot.com

 

Sat, 02/21/2015 - 03:14 | 5811360 rex-lacrymarum
rex-lacrymarum's picture

Probably irrelevant. Money supply growth has been accelerating at warp speed everywhere recently (US, euro area, Japan). Some of the annualized monthly and quarterly growth rates are in the mid double digits (e.g. narrow US money TMS-1 has increase at 62% annualized in December). So the market reaction has very likely nothing to do with valuations, which are at their most stretched in history by some measures - money supply growth (i.e., inflation/monetary debasement) is the driver. 

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