Citigroup's Tobias Levkovich is betting on solid stock-market gains over the next year as the economy heals from the coronavirus pandemic. The bank's chief U.S. equity strategist initiated late Monday night a 12-month S & P 500 target of 3,160. That represents a 7% upside from Monday's close of 2,953.91. The S & P 500 traded down slightly on Tuesday, hovering around 2,950. "Embedded in the forecast is an expectation for COVID-19 vaccines and treatments that lift many of the hindrances to 'back to normal' practices that still are in place currently," Levkovich said in a note to clients. "While some industries could face permanent long-term damage, the Great Pause will reverse itself as time progresses." Levkovich's new 12-month target comes amid a massive surge in equity prices over the past two months. The S & P 500 has rallied about 35% since hitting an intraday low on March 23 as some states begin to reopen their economies. Those gains also come amid apparent progress on the development for a potential coronavirus vaccine. On Monday, Moderna reported positive data from a preliminary coronavirus vaccine trial. The news sent equities surging, with the S & P 500 posting its biggest one-day gain since early April. However, Levkovich noted the market's ride to his 12-month target will not be a smooth one as he reiterates his year-end 2020 target of 2,700. "While the economy will improve in 2H20 from 2Q20's shutdown, there are four clear challenges to overcome; specifically, tighter C & I lending standards, 36 million unemployed workers, the Presidential elections and the likelihood that people emerge from their homes with social distancing practices that are unlike a normal rebound," Levkovich said.
People walk by the New York Stock Exchange (NYSE) on May 18, 2020 in New York City.
Spencer Platt | Getty Images
Citigroup's Tobias Levkovich is betting on solid stock-market gains over the next year as the economy heals from the coronavirus pandemic.