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A handful of strategists have so far offered their outlooks about where they think the S&P 500 is heading next year – and each one is expecting it to go up.

The new year is anticipated to usher in the distribution of a COVID-19 vaccine and a new presidential administration with a split Congress, alongside an extension of this year’s improving economic activity and low interest rates. Many analysts have cited this medley of events as fuel for another rise in equities.

Read more: How to think about stock investing: The full breakdown

Here’s a look at where strategists expect the S&P 500 (^GSPC) will land by the end of 2021.

*Jefferies (Target: 4,200; EPS $180): ‘The much-maligned value and cyclical growth sectors are slowly making a comeback’

Improving prospects for a vaccine, easy lending conditions and broader participation among cyclical and value stocks will help propel the stock market higher in 2021, according to Jefferies strategist Sean Darby.

Jefferies upgraded its outlook for the S&P 500 in early December after initially unveiling a price target of 3,750 in early November before news of Pfizer, Moderna and AstraZeneca’s vaccine efficacy data first emerged. Their new outlook sees the S&P 500 jumping to 4,200, representing appreciation of another 14.7% from the index’s record closing level from Dec. 1.

November’s historic stock market rally, led by cyclical and value stocks in the energy, financials and industrials sectors, reflected broadening equity strength beyond just big tech and software shares. That rotation is anticipated to continue into next year, helping push the broader market higher, Darby said.

“Notwithstanding the second and third Covid-19 waves permeating the world, there is a palpable feeling that the global economy is resynchronizing with the household, corporate and government balance sheets expanding simultaneously alongside aggressive monetary policy,” Darby wrote in a note. “The much-maligned value and cyclical growth sectors are slowly making a comeback as inflation pressures begin to return. This rotation has been supported by a steepening in the yield curve and with growthier stocks trading sideways.”

“Improved visibility towards a successful coronavirus vaccine, easier lending conditions, little evidence of deflation and a sentiment switch from growth to value will lift US bank shares through 2021,” he added. “Rising global capacity utilization rates, firmer producer prices, improving world trade volume, booming housing/autos and a weak dollar are the perfect environment for the S&P 500 Industrials. The S&P 500 materials sector is blowing off in response to a weak dollar, higher commodity prices, an upswing in global manufacturing and a restocking cycle.”

*Price target upgraded on December 2, 2020

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Bank of America (Target: 3,800; EPS $165): ‘A lot of optimism is priced in already’

Stocks have already priced in much of the expected recovery in the economy and corporate profitability, leaving just slightly more upside heading into next year, according to Bank of America equity strategist Savita Subramanian.

Subramanian’s S&P 500 price target of 3,800 implies 4.5% appreciation from closing prices on November 24, for one of the most muted forecasts among major Wall Street firms so far.

Even as investors ride a wave of vaccine-related optimism, potential negative catalysts abound, she noted.

“The recovery is intact and the world likely re-opens in the 2H, but a lot of optimism is priced in already on vaccine/recovery,” Subramanian said in a note. “Vaccine execution risk, delayed fiscal stimulus and longer lockdowns are risks. A simple move in the equity risk premium back to the prior decade average of ~500-550bps (vs. current 437bps), would drop the S&P 500 down to 3000-3050.”

“But a few themes support stocks: the S&P 500 dividend yield is 3x the 10-year yield, and S&P 500 dividends are set to increase in 2021,” she added. “And unlike bond yields, earnings are nominal and participate in inflationary upside – where inflation risks may be running higher, given rampant money-printing and a potential post-vaccine spike in demand.”

By style and sector, Subramanian said she picks value stocks over growth, cyclicals over defensives and small caps over large caps, given each of these groups’ likelihoods to be disproportionately boosted by a post-virus economic recovery.

Price target as of November 24, 2020.

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BMO Capital Markets (Target: 4,200; EPS: $175): ‘Expect another year of double-digit gains’

Heading into 2021, stocks are poised to keep reaping the benefits of the massive infusion of monetary support from the Federal Reserve, along with an anticipated additional round of fiscal stimulus. This constructive policy environment is likely to help push equities higher even as virus concerns linger for at least the first several months of the new year, according to BMO Capital Markets strategist Brian Belski.

“Even with recent positive vaccine and treatment developments, the global pandemic and its unprecedented impact is unlikely to fade in coming months. As such, the massive fiscal and monetary response in the U.S. and around the world (also unprecedented) will likely remain in place to combat its negative economic impact for the foreseeable future,” Belski said in a note. “Such environments have historically supported continued stock market gains and we see no reason why 2021 will be any different.”

Corporate earnings growth will recover sharply from pandemic-era declines, Belski added, especially since this year’s drop in company profits had largely been triggered by lockdowns, rather than underlying issues in the companies themselves.

“Aside from the global financial crisis, 2020 represented the swiftest quarter-over-quarter earnings collapse for the S&P 500 where index EPS plummeted nearly 50% during 1Q,” Belski said. “Thus, we anticipate that 2021 has the potential to be one of the best years ever in terms of earnings growth, something we believe will also help to push stock prices higher.”

His 2021 S&P 500 price target of 4,200 implies additional upside of 17.3% from closing prices on November 19, and 15% appreciation from his 3,650 price target for the S&P 500 for year-end 2020.

To arrive at this level, Belski assumes one or more COVID-19 vaccines will be publicly available during the first half of the year, at least one more round of fiscal stimulus from Congress will emerge in the $1 trillion range, trade uncertainty will moderate, and the yield curve will begin to steepen.

“We remain optimistic and expect another year of double-digit gains as the economy and society slowly transition back to normal,” he said.

Price target as of November 19, 2020

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Credit Suisse (Target: 4,050; EPS: $168): What the future will look like in the future

Credit Suisse analyst Jonathan Golub introduced his 2021 price target for the S&P 500 (^GSPC) of 4,050, implying 12.2% upside from closing levels on November 17. Underpinning this upbeat call is his assumption that two years from now, the post-virus economic recovery will have already hit a peak.

“Our 2021 forecasts are designed to answer a simple question: what will the future (2022) look like in the future (end of 2021),” Golub said in a new note Wednesday. “From this perspective, we are forced to de-emphasize the near-term, focusing instead on the return to a more normal world.”

“As we look toward 2022, the virus will be a fading memory, the economy robust, but decelerating, the yield curve steeper and volatility lower, and the rotation into cyclicals largely behind us,” he added.

Based on Golub’s analysis, economic activity as measured by GDP growth will renormalize at levels slightly above trend, or with quarterly annualized growth rates just over 3%, starting in the second half of 2021.

And the labor market — which as of October was still 10 million payrolls short of pre-pandemic levels — will likely reach “full employment” by the second half of 2022, Golub added.

Since the stock market discounts future events, each of these prospects for further improvement down the line should translate into a higher S&P 500 as investors price in these events.

Analysts have already begun to account for an anticipated improvement in corporate profits, as S&P 500 earnings per share (EPS) have on aggregate sharply topped consensus expectations so far for each of second and third quarter results this year.

“We expect 2020 estimates to rise, 2021 to remain stable and 2022 to moderate,” Golub said.

His 2021 S&P 500 price target of 4,050 is based on earnings per share of $168 next year, for an improvement of 20% over the expected aggregate EPS this year. He expects EPS will then rise to $190 in 2022.

Price target as of November 18, 2020

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Morgan Stanley (Target: 3,900; EPS: $193): ‘2021 will be much more about stock picking’

Next year is set to be a stock-picker’s market, according to strategists from Morgan Stanley.

“After a year of big swings in valuations, 2021 will be about who can deliver on earnings,” Morgan Stanley strategists led by Michael Wilson wrote in a note.

“2020 was all about beta and understanding how equity markets trade in and around a recession that handed us the fattest pitch we’ve seen in a decade,” he added. “2021 will be much more about stock picking (alpha) and should favor those companies that can deliver earnings growth that isn’t already expected or priced.”

Wilson said he prefers companies with earnings growth most tied to re-openings and an economic recovery.

“We continue to lean cyclically in our recommendations,” he said, noting that one of his “highest conviction views” is for small-cap companies over large-cap players, with the former tending to outperform during recoveries.

“Our sector [overweights] remain Financials where we see positive upside skew on rising rates and better credit; Materials and Industrials on demand rebound, earnings leverage and inflation protection; and Health Care given its GARP [growth-at-a-reasonable-price] characteristics and re-rating potential with fading political overhangs,” he added.

He also upgraded Information Technology sector to Equal weight from Underweight, left Consumer Discretionary sector as Equal weight and remained Underweight on the defensive Consumer Staples and Utilities sectors.

Price target as of November 16, 2020

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Goldman Sachs (Target: 4,300; EPS $175): A vaccine is the ‘more important development for the economy’ than the new administration

As with strategists at JPMorgan, those at Goldman Sachs agreed that a vaccine will be the most critical catalyst for the stock market in 2021.

“A vaccine is a more important development for the economy and markets than the prospective policies of a Biden presidency,” Goldman Sachs strategists led by David Kostin said in a note.

The economic reopening coming alongside a vaccine, in tandem with a status quo policy environment cemented with a divided government, will help push the S&P 500 to 4,300 by year-end 2021 and then to 4,600 by the end of 2022, Kostin said. The price target implies nearly 20% appreciation from closing prices on November 13.

The additional upside is contingent on a number of baseline assumptions, however, including at least one vaccine being approved by the FDA and administered to a “large portion of the U.S. population,” Kostin added. He also assumes that the Senate will remain under Republican control following the Georgia run-off elections in January, the economy will continue on a path toward a “V-shaped” recovery, corporate profits will rebound, Fed funds rate will hold near-zero and the yield curve will steepen while the 10-year Treasury yield climbs “only modestly.”

To maximize potential returns while minimizing risks over the next year, the strategists advised investors “use a barbell,” or focus on the extremes of stocks most exposed to, and least exposed to, risks from the pandemic.

Specifically, they suggested “tactical positions in deep Value stocks that benefit from the vaccine and economic normalization and stocks with long-term secular growth prospects that have high growth investment ratios.”

“We recommend overweights in Information Technology, Health Care, Industrials and Materials,” they said.

Price target as of November 11, 2020

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JPMorgan (Target: 4,500; EPS $178): ‘One of the best backdrops for sustained gains in years’

Investors are entering 2021 against a confluence of market-positive events, including improving prospects for a vaccine and sustained economic reopening, gridlock in Washington and accommodative central bank policy, noted JPMorgan strategists led by Dubravko Lakos-Bujas.

Given the COVID-19 crisis, vaccine distribution is likely the linchpin event. But even with widespread vaccine availability still months away, optimism over early vaccine efficacy data has already sparked a rally among stocks hardest-hit by the pandemic. This rotation is set to continue, bringing the S&P 500 higher as participation broadens beyond just Big Tech and “stay-at-home” stocks, according to JPMorgan strategists led by Lakos-Bujas.

“The equity market is facing one of the best backdrops for sustained gains in years,” Lakos-Bujas said in a note. “After a prolonged period of elevated risks (global trade war, COVID-19 pandemic, U.S. election uncertainty, etc.), the outlook is significantly clearing up, especially with news of a highly effective COVID-19 vaccine.”

Both Pfizer (PFE) and Moderna (MRNA) announced this month that their late-stage trials showed their vaccine candidates were more than 90% effective in preventing COVID-19 in participants, for an efficacy rate far and above what many public health experts had been expecting.

And in Washington, a gridlock scenario with Democratic President-elect Joe Biden, a Democratically controlled House of Representatives and what is likely to remain a Republican-controlled Senate represents the “market nirvana” scenario, according to Lakos-Bujas.

“With an even balance of power in the legislature, major tax increases and regulatory changes will be difficult to pass, while at least some easing of the global trade war should be expected,” he said. “Global central bank policy remains very supportive (rates to remain at zero with ongoing [quantitative easing]). The prospect for another round of fiscal stimulus has improved as well, though scope and size should be narrower.”

“Given the above, we see the S&P 500 surpassing our price target of 3,600 before year-end and reaching 4,000 by early next year, with a good potential for the market to move even higher (~4,500) by the end of next year.”

Price target as of November 9, 2020

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This article was originally published on November 17, 2020.

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck

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