Leon Cooperman says market is getting ahead of itself, earnings won't be normal for 2 years

Published Mon, Apr 13 20201:42 PM EDTUpdated Mon, Apr 13 20202:19 PM EDT

(This story is for CNBC Pro subscribers only) Billionaire investor Leon Cooperman told CNBC on Monday that while he's confident the market may have found its bottom, he's not convinced stocks will post a sharp rebound as some have predicted. Cooperman said that while he thinks the S & P 500 could creep higher over the next several months, he thinks the upside will be capped as it takes a while for profits to return. "My view is a reasonable multiple for the S & P is 17 times," Cooperman told " Halftime Report " host Scott Wapner. "I think normalized earnings, which we won't see for two years, is about $150. And if I take 17 times 150, I think the [S & P's] fair value of the market is 2,550." Part of the reason for his cautious optimism, he said, is because markets appear to be pricing in a healthy recovery in the U.S. economy before official employment and growth metrics clinch the pullbacks economists predict. While Cooperman expects the economy to eventually recover, he warned that "the market's a little bit ahead of the economic fundamentals at the present time." Even though the Labor Department estimated that American businesses cut some 701,000 positions during the month of March and that the unemployment rate rose to 4.4%, many economists expect the full extent of the damage to show in future reports. "I don't really see the big upside," said Cooperman, founder of the Omega Advisors investment firm, which he turned into a family office at the end of 2018. "My view is earnings will be less than people will have expected. Demand will likely come back more slowly," he said. "There's more debt to be serviced, more cost to incur for compliance. There will be likely be equity issuance to replace lost capital. Stock repurchases broadly are over for the foreseeable." The nonfarm payrolls report, for instance, only reflected the employment situation in March through the week ended March 12, which came just as the nation began its near shutdown. Goldman Sachs expects the unemployment rate to peak around 15% later this year and gross domestic product to fall 9% in the first quarter followed by a stunning 34% plunge in the second quarter.

Leon Cooperman

Scott Mlyn | CNBC

(This story is for CNBC Pro subscribers only)

Billionaire investor Leon Cooperman told CNBC on Monday that while he's confident the market may have found its bottom, he's not convinced stocks will post a sharp rebound as some have predicted.