Investing.com – Wells Fargo expects a positive outlook for stocks in 2025, driven by strong earnings growth and a supportive economic environment.
According to the bank, “Increasing economic growth will drive corporate sales, while deregulation, continued cost control, and easing credit conditions should support an expansion of profit margins in 2025.”
The bank expects stock prices to continue to rise. “We expect share prices to continue to rise, driven primarily by earnings growth spilling over into more cyclical areas of the market.” Wells Fargo (NYSE:) reported.
The stock's EPS target at the end of 2025 is $275, with a target price range of $6,500 to $6,700.
The company notes that expectations of rising stock prices are consistent with historical patterns during Fed easing cycles.
“Among the four easing cycle cases that have not had a recession since 1980, the average S&P 500 return 12 months after the first cut was more than 22%, with the worst single return still an impressive 10%,” Wells Fargo said. 16%”.
In terms of positioning, Wells Fargo remains leaning toward quality, favoring large-capitalization U.S. stocks over mid-cap and small-cap stocks. Internationally, preference is given to developed markets outside the United States over emerging markets.
Sector-wise, Wells Fargo suggests focusing on cyclical and growth-oriented sectors rather than defensive ones.
The bank received a “Most Preferred” rating in the energy sector and a “Preferred” rating in the Telecommunications Services and Industrials. Conversely, consumer staples and amenities are viewed negatively.
