Bond.az -- RBC Capital has set a 12-month S&P 500 price target of 7,900, implying roughly 7.7% upside from early May levels.
Lori Calvasina said the index's move higher will not be linear, but any pullbacks would be limited to 5-10%.
A deeper 14% to 20% drawdown is unlikely unless recession concerns return.
The price target is based on RBC Capital's "AI in the fast lane, Middle East in the slow lane" model.
The model trims Q1 2027 consensus EPS by 5%, assuming 28% growth for AI stocks and 6% for the rest.
If inflation rises to 3.8%, the Fed hikes, and yields push to 5%, fair value would fall to the 7,400-7,500 range.
Near-term catalysts for a pullback include war impacts, profit-taking in semiconductors, midterm election uncertainty, and higher interest rates.
RBC Capital prefers Growth over Value and U.S. equities over international peers.
