Deutsche Bank forecasts S&P 500 at 7,000 for 2025-end; Barclays raises to 6,600

(Reuters) -Deutsche Bank on Monday set 7,000 points as the target for the S&P 500 index by the end of 2025, saying it expects robust earnings growth to continue into the next year among other factors.

Earlier in the day, Barclays raised its 2025 forecast for the index to 6,600 from 6,500, on the back of a resilient U.S. economy, gradual decrease in inflation and robust potential earnings growth of mega-cap technology companies.

Deutsche Bank's forecast represents an upside of 17.27% from the index's close of 5,969.34 on Friday, with Barclays' forecast 10.56% higher.

"For U.S. equities, we think macro positives outweigh the negatives heading into next year," analysts at Barclays wrote in a note.

The U.S. Federal Reserve is expected to continue its monetary policy easing cycle, while the uncertainty post the U.S. presidential election has been resolved and jobless rate remains low, Barclays said, which could together boost the benchmark index.

Last week, both Goldman Sachs and Morgan Stanley forecast the index could touch 6,500 by 2025-end, banking on continued growth in the U.S., stronger corporate earnings and the Fed's rate-cut path.

Deutsche Bank analysts said from a demand-supply perspective the U.S. equity market remains solid, with drivers of the last two years – large inflows and strong buybacks – continuing into 2025. The brokerage also sees earnings-per-share (EPS) growth for the index at $282 in 2025.

Big Tech companies will continue to drive S&P 500 earnings, said Barclays, which raised the benchmark index's EPS estimate to $271 from $268.

"We expect most sectors to be impacted by disinflationary margin pressure and slowing ex-US growth in 2025, while Big Tech continues offsetting to the upside," Barclays noted.

(Reporting by Gokul Pisharody in Bengaluru; Editing by Krishna Chandra Eluri and Shailesh Kuber)