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• Investors fear an imminent recession
• JP Morgan remains optimistic
• Three stocks with upside potential
The war in Ukraine, coupled with strong demand and problems in the global supply chain in the wake of the coronavirus crisis, has pushed US inflation to its highest level in more than 40 years. As a result, the US Federal Reserve began raising interest rates in the spring and has now tripled its benchmark interest rate. For monetary authorities, however, this tightening of monetary policy is a balancing act, since higher interest rates help to dampen inflation, but they can also slow down economic growth. As a result, many market participants are now facing downside fears.
The S&P 500, which reflects the broader US stock market, shows how great the uncertainty is. With currently 3,795.73 points (end date: June 23, 2022), it has lost a significant 21.22 percent of its high of 4,818.62 points on January 5, 2022.
However, Dubravko Lakos, Global Head of Equity Macro Research at the US investment bank JPMorgan, expects the stock markets to improve significantly: “Market participants have basically prepared themselves for a recession. However, our basic scenario is that there will be no recession,” the analyst told US broadcaster CNBC. “Based on that assumption, we think the portfolios are wrong.”
Lakos expects the S&P 500 to climb to the 4,900 point mark by the end of the year. Based on the current price level, that would be a strong plus of 29 percent.
JPMorgan experts see three stocks as particularly attractive: Smartsheet, a platform provider that enables companies to schedule, record, manage, automate, and report work, has great potential, according to MoneyWise. . The cloud-based software platform is offered via a subscription model. In the fiscal first quarter, Smartsheet delivered 44 percent revenue growth. Nevertheless, the share has lost more than 63 percent of its value since the beginning of the year.
JP Morgan analyst Pinjalim Bora recently reiterated an “Overweight” rating on Smartsheet stock. They lowered the target price from $80 to $58, but it’s still well above the current price level of $31.62 (close 6/23/2022).
JPMorgan also praises Microsoft. In the first quarter, the software giant increased its sales by 18 percent compared to the same quarter of the previous year and contributed 12.4 billion US dollars (+25 percent) to the company’s success through dividends and share buybacks to shareholders. allowed to participate. Nevertheless, the stock market was faced with bad mood and has lost more than 26 percent since the turn of the year. Against this background, analyst Mark Murphy from JP Morgan reiterated his buy recommendation and increased his price target to USD 320.00 (closing date June 17, 2022: USD 258.86).
According to MoneyWise, JPMorgan also sees great potential for Eli Lilly. The pharmaceutical giant reported a 15 percent increase in sales in the first quarter. Shareholders were happy too, receiving a total of $900 million in dividends and $1.5 billion in share buybacks.
At $312.67 (closed June 23, 2022), Eli Lilly’s stock is up more than 13 percent year-over-year. JPMorgan analyst Chris Schott expects this positive trend to continue and therefore reiterated his “overweight” rating. He raised the price target to $355 from the original $340.
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