Equity Research

We raise our 3-, 6-, and 12-month S&P 500 return forecasts to +3% (6400), +6% (6600), and +11% (6900). Earlier and deeper Fed easing and lower bond yields than we previously expected, continued fundamental strength of the largest stocks, and investors' willingness to look through likely near-term earnings weakness support our revised S&P 500 forward P/E forecast of 22x (from 20.4x). Our previous index targets were 5900, 6100, and 6500, respectively.

Amidst mixed data points across Vegas, Regionals and Macau, the backdrop for Gaming in 2025 remains choppy, drawing late-cycle concerns and debate about whether the companies are over earning. While we proceed with caution, we believe investors will be rewarded for a nuanced (and patient) approach, with the sector ripe for stock picking. Within the note, we outline our 5-factor framework for investing in gaming stocks, where we prefer stocks with medium-term, visible earnings power from growth capex opportunities.