Winning Wilson: not everyone is in the BTD camp

Remember – Mike Wilson’s base case YE’22 target for the S&P 500 remains 4400, which assumes an 18x P/E on forward 12-month EPS of $245. His EPS forecast is largely in-line with consensus, while his target P/E is ~10% lower. However, the Fed’s faster taper / rate hike schedule pulls forward the S&P 500’s valuation risk to 1H’22, and could even see an overshoot to the downside of what he sees as ‘fair value’ based on the much more aggressive timetable for quantitative tightening. Bottom line: Tapering + rate hikes likely lead to a 10-20% correction for the S&P 500 during 1H’22.