If you think the stock market selloff has come to an end, Morgan Stanley has some bad news.<\/p>\n
The S&P 500 is already down 14% year to date, but the Wall Street juggernaut believes the market has yet to hit a bottom.<\/p>\n
Our '22\/'23\/'24 base case estimates are now 3%\/13%\/14% below consensus, respectively, a team of Morgan Stanley analysts led by Mike Wilson write in a recent note to investors. In our base case, 2023 now marks a modest earnings contraction (-3% year-over-year growth), though we do not embed an economic recession in this scenario.<\/p>\n
While acknowledging the poor performance in equities year-to-date, we do not think the bear market is over if our earnings forecasts are correct.<\/p>\n
The analysts expect the S&P 500 to fall to 3,400 by year-end. And if a recession hits the economy, they say the benchmark index could drop to 3,000.<\/p>\n
Considering that the S&P 500 sits at around 4,107 right now, Morgan Stanleys projection implies a further downside of 17% to 27%.<\/p>\n
That doesnt mean selling everything. The Wall Street firm still sees upside in quite a few companies. Heres a look at three that it finds particularly attractive.<\/p>\n
This American pharmaceutical giant commands around $300 billion in market cap, with products marketed in 120 countries around the world.<\/p>\n
Despite the market downturn this year, Eli Lilly is not a beaten-down stock.<\/p>\n
In the first six months of 2022, Eli Lillys revenue grew 6% year over year. Meanwhile, the companys adjusted earnings per share improved 12% from a year ago.<\/p>\n
Story continues<\/p>\n
Shares are actually up roughly 16% so far in 2022, and Morgan Stanley expects the trend to continue.<\/p>\n
On Sept. 7, analyst Terence Flynn reiterated an overweight rating on Eli Lilly while raising his price target from $395 to $412.<\/p>\n
Considering that Eli Lilly shares trade at around $317 apiece right now, the new price target implies a potential upside of 30%.<\/p>\n
Welltower is in the real estate business.<\/p>\n
The company doesnt own fancy shopping malls or posh office buildings. Instead, it focuses on health care infrastructure and provides real estate capital to senior housing operators, post-acute care providers and health systems.<\/p>\n
In Q2, Welltowers revenue grew 29.1% year over year to $1.47 billion. Its same-store net operating income rose 8.7%.<\/p>\n
Health care is a recession-resistant sector, so health care-anchored real estate is typically in high demand.<\/p>\n
The company also benefits from a major demographic tailwind: population aging.<\/p>\n
Morgan Stanley analyst Ronald Kamdem notes that the population aged 75 and older is expected to grow by 4% annually through 2030, which could serve as a catalyst for Welltowers business.<\/p>\n
Kamdem has an overweight rating on the company and a price target of $90 implying a potential upside of 15%.<\/p>\n
Thanks to strong oil prices, energy stocks have turned out to be some of the best performers of the S&P 500 so far this year.<\/p>\n
Exxon Mobil, for instance, is up 53% year to date and thats after a strong rally in 2021.<\/p>\n
The oil-producing giant gushes profits and cash flow in this commodity price environment. In the first six months of 2022, Exxon earned $23.3 billion in profits, a huge increase from the $7.4 billion in the year-ago period. Free cash flow totaled $27.7 billion for the first half, compared to $13.8 billion in the same period last year.<\/p>\n
Solid financials allow the company to return cash to investors. Exxon pays quarterly dividends of 88 cents per share, translating to an annual yield of 3.6%.<\/p>\n
Morgan Stanley analyst Devin McDermott has an overweight rating on Exxon and recently raised his price target to $113 roughly 16% above the current levels.<\/p>\n
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.<\/p>\n
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Morgan Stanley expects the S&P 500 to plunge another 17%-27% within the next four months use these 3 top recession-resistant stocks for protection -...<\/a><\/p>\n","protected":false},"excerpt":{"rendered":" If you think the stock market selloff has come to an end, Morgan Stanley has some bad news. The S&P 500 is already down 14% year to date, but the Wall Street juggernaut believes the market has yet to hit a bottom. Continue reading