Airbnb, Inc. (ABNB) Stock Forecasts

Summary

Our bond/stock asset allocation model indicates that bonds are the asset class currently offering the most value, as interest rates have risen and stocks have recovered some of the ground they lost last year. But stocks are not yet seriously overvalued. Our model takes into account current levels and forecasts of short- and long-term government and corporate fixed-income yields, inflation, stock prices, GDP, and corporate earnings, among other factors. The model output is expressed in terms of standard deviations to the mean, or sigma. The mean reading from the model, going back to 1960, is a modest premium for stocks of 0.15 sigma, with a standard deviation of 1.0. The current valuation level is a 0.70 sigma premium for stocks, which is inside the normal range but up from the 0.50 sigma premium at the beginning of the year. Other measures also show reasonable valuations for stocks. The current forward P/E ratio for the S&P 500 is 17, which is within the normal range of 10-21 and down from 22 a year ago. And the current S&P 500 dividend yield of 1.6%, while below the historical average of 2.9%, is up from an ultralow 1.2% as recently as 2021. Based on the current valuation levels, as well as our interest rate and earnings forecasts, we have called for a recovery in stock prices in 2023 from bear-market lows and are now boosting our year-end S&P 500 target to 4,600. Our current recommended Asset Allocation Model for Moderate accounts is 67% Growth assets, including 65% equities and 2% alternatives; and 33% Fixed Income, with a focus on opportunistic segments of the bond market.