No recession ahead: Evercore ISI predicts S& P 500 will jump 22% from current levels

PUBLISHED TUE, MAY 24 20226:51 PM EDT


While retail investors head for the exits as stock prices sharply fluctuate, Evercore ISI&rsquo s Julian Emanuel wants to put money to work.

He calls the market environment very ugly, but he believes the economy will avert a recession &mdash particularly due to healthy credit markets and continued gains.

&ldquo The path to higher [stock] prices really is a function of being able to discount the macro news and focus on the fact that you&rsquo re still going to have mid-to-high, single-digit earnings growth,&rdquo the firm&rsquo s senior managing director told CNBC&rsquo s &ldquo Fast Money&rdquo on Tuesday.

His  S& P 500  year-end target is 4,800, which implies a 22% jump  from the Tuesday market close. Emanuel contends much of the market losses were driven by retail investors who were overexposed to growth stocks, namely in  Big Tech.

&ldquo The bull case rests on essentially a drying up of the public selling of these stocks,&rdquo he said.

According to Emanuel, retail investors will return to stocks when they figure out employment remains strong and  inflation is peaking. He expects that to happen later this summer.

&ldquo When things turn down, that will be a more benign environment for the equity markets,&rdquo said Emanuel.

His forecast also hinges on the benchmark  10-year Treasury Note yield  cooling and ending the year at 3%. On Tuesday, the yield fell to its lowest level in more than a month.

Emanuel is most bullish on  health care  and sees solid upside for long-term investors. He&rsquo s also overweight in  financials  and  industrials.

&ldquo The shift from growth to value is something that&rsquo s ongoing,&rdquo Emanuel said.