Barclays Offers Surprise S&P 500 Price Target After Energy Shock Warnings
We question Barclays timing, and here's what we’re watching when it comes to Moody’s warning.
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Caution Warning
"We meet aliens every day who have something to give us. They come in the form of people with different opinions."
-William Shatner
After parsing today’s March Flash PMI report, we were a little surprised to learn that Barclays upped its 2026 year-end price target for the S&P 500 to $7,650 from $7,400. That call relies on two things. First, Barclays’s view that:
"... strong corporate earnings led by the technology sector and resilient economic growth will outweigh rising macro risks, including war in the Middle East, AI-driven disruption and stress emerging in private credit markets."
Second, the investment bank lifted its 2026 S&P 500 EPS to $321 from $305, a move that more than makes up for where Barclays was but also one that puts it ahead of the $316.16 consensus EPS figure published by FactSet.
Analyzing those figures from Barclays, the new implied P/E multiple is about 23.8, down from 24.3x with its prior ones, but that new P/E is still only slightly ahead of the average peak P/E of 23.6x for the S&P 500 between 2015 and 2025, adjusted for 2020 and the pandemic.
Our question isn’t so much about the multiple, but more about the increase in Barclays’ 2026 EPS forecast following U.S.-Iran related warnings from Honeywell (HON) and El Pollo Loco (LOCO) flagged the conflict as a factor affecting transportation and energy costs. Adding to that, Dollar Tree's (DLTR) latest filing with the SEC noted potentially higher costs due to increase fuel prices, and United (UAL) commented about the potential impact of jet fuel prices.
And while we continue to think that the overall duration of the conflict and the closure of the Strait of Hormuz will be what determines the magnitude of the impact on 1H 2026 and 2026 EPS expectations, we are surprised that Barclays chose now to lift its EPS forecast. Rather than ponder more on that, our focus will remain on earnings results and guidance from companies reporting ahead before the Q1 2026 earnings deluge begins the week of April 13.
The other opinion stems from Moody’s Analytics and its chief economist, Mark Zandi, someone you’ve probably seen if you watch any financial news. On Tuesday, Zandi shared his view that a recession is “more than likely by the second half of the year” unless geopolitical tensions ease and the domestic economy stabilizes.
Zandi also flagged the weak jobs market and renewed inflation pressures even before the U.S.-Iran conflict. He also sees stagnant retail sales, declining vehicle purchases, and weak home sales as evidence that consumers are struggling more broadly.
While we acknowledge Zandi’s concerns, his sentiment is already reflected in our view about conflict duration and where oil prices settle out should a resolution come to pass. And, with that in mind, we will continue to monitor leading indicators, including new order data contained in the monthly PMI reports from S&P Global and ISM.
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