BMO chief investment strategist Brian Belski, known as one of the Street’s most bullish prognosticators, on Monday reiterated his 18,200 target for the S&P/TSX Composite Index, despite the near 30 per cent drop in Canadian stocks since their peak in February.
Mr. Belski first issued the target in November of last year. By not changing his target, Mr. Belski is signaling a sharp rally will unfold after the coronavirus crisis fades.
"While we continue to believe the economy, markets, and earnings WILL recover from the shock of the coronavirus (COVID-19 virus), there is no denying the fundamental impact of lower oil prices on the overall Canadian earnings environment.
In fact, prior to the recent decline, the Energy sector accounted for 15% of S&P/TSX 2020 forward earnings when oil was averaging over $50/bbl. As such in the face of $30/bbl oil, coupled with increased economic uncertainty, we are trimming our 2020 earnings target by 10% to our bear case scenario of $1,020. However, we are not revising our 2020 SPX/TSX price target at this time.
While investments, let alone society, have been gripped by the fear of the lasting effects of COVID-19 virus, we firmly believe this too shall pass and remain committed to perspective and analytically driven messaging as opposed to fear-laden headlines and the natural impulse to react."
Belski outlined five key points in his investment views:
· Lowering his S&P/TSX 2020 EPS Target to $1,020 from $1,140
· Real Estate: Upgrade to Overweight From Market Weight
· Energy: Remain Overweight
· Financials : Remain Overweight
· Rebalancing Target Weights to Reflect Recent Market Action