(Bloomberg) -- One of Wall Street’s most prominent bears has just turned positive on the outlook for US stocks.

Morgan Stanley’s Michael Wilson now sees the S&P 500 rising 2% by June 2025, a major about turn from his view that the benchmark will tumble 15% by December.

The strategist — whose bearish 2023 outlook failed to materialize as markets kept rallying — finally gave in and boosted his target for the S&P 500 to 5,400 points from 4,500. That catapults his forecast from among the lowest on Wall Street to one that projects a fresh record for the index.

“In the US, we forecast robust EPS growth alongside modest multiple compression,” Wilson wrote in a note on Sunday with his Morgan Stanley colleagues, as they discussed the firm’s second-half views across various assets. 

In recent months, Wilson repeatedly stuck by his 4,500 points target for the S&P 500, even as the index notched a series of record highs, and said in March there was no justification to upgrade it given an absence of broad earnings growth. He said last month he was steering clear of making big calls on the direction of the index, given heightened economic uncertainty.

Generally, the bank expects a “sunny macro environment,” which will support risk assets in the second half of the year, although Wilson reiterated his view that broader outcomes for the economy are becoming hard to predict as data become more volatile.

The Morgan Stanley strategist recommends a barbell approach of quality cyclicals stocks and quality growth and maintains a long exposure to certain defensive areas such as consumer staples and utilities.

Wilson’s 20% upgrade leaves JPMorgan Chase & Co.’s Dubravko Lakos-Bujas among the few remaining prominent bears on Wall Street. His forecast calls for a slump of more than 20% in the S&P 500 by year end. 

Lakos-Bujas’s colleague, Mislav Matejka, said Sunday that US earnings are unlikely to jump sharply in the third and fourth quarters to meet the current consensus if economic data remain weak. 

“The hurdle rate for US earnings growth in the second half is quite optimistic, especially in light of a clear activity softening,” Matejka wrote in a note.

Meanwhile, Deutsche Bank AG strategists also raised their end-2024 target for the index to 5,500 from 5,100 on Friday.

--With assistance from Sagarika Jaisinghani.

(Updates with commentary by JPMorgan’s Matejka)

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