S&P 500 Outlook by Sevens Report

Investing.com — The S&P 500 is hovering near what strategists at Sevens Report suggest could be its "fundamental fair value," according to their Thursday report.

This view accompanies upward adjustments in expected 2025 earnings per share (EPS) and an increase in market multiples, especially in what the Sevens Report terms the “current-situation” and “better-if” scenarios.

For the first time, the S&P 500 better-if target has exceeded 6,000, with the current-situation target now within 50 points of that level.

November Target Ranges

The firm has set the November “current situation” target range for the S&P 500 between 5,817 and 6,094, with a midpoint of 5,956. This represents a significant upward adjustment from October's midpoint of 5,460.

Driving these new targets is an updated 2025 EPS forecast for the S&P 500, now at $277 per share, along with a revised market multiple of 21X-22X, compared to October’s 20X. This improvement was supported as the S&P reached the lower bound of 5,817 for the first time just a month ago.

Market Behavior

Interestingly, stocks have stalled and fluctuated after reaching this lower bound, oscillating around the 5,800 area until the post-election breakout propelled the S&P 500 towards the midpoint of the current situation target at 5,956.

This week, the market shows signs of “digestive churn” around this midpoint, as the S&P briefly exceeded it before retreating. Should the rally resume, the report suggests investors should anticipate a similar “pause” as the S&P 500 nears the upper limit of 6,094—a level not yet reached in the 2024 market rise.

On the contrary, if profit-taking occurs, Sevens’s team anticipates 5,956 to act as immediate support, with 5,817 serving as secondary support.

Scenarios

• Better-If Scenario: Sevens Report forecasts a target of 6,300, driven by an EPS boost to $280 and a market multiple of 22.5X. This would imply a climb above current highs, potentially fueled by a “runaway rally” alongside factors like fear of missing out (FOMO) and short squeezes. Round numbers such as 6,100 and 6,150 could become “magnetic” should positioning get heavy, pinning the index for days or weeks.

• Worse-If Scenario: This outlook anticipates a target range of 4,420 to 4,680, based on a modestly higher 2025 EPS of $260 and a multiple of 17X-18X. While the index hasn’t approached this range in 2024, the lower end could become critical in the event of a major downturn. A fall below 5,186 could trigger a “downside measured move” near 4,371, which lies 50 points below the worst-case lower bound.