There’s a lot of life left in corporate earnings, which should allow the S&P 500 to rise by nearly 9% between now and the end of next year, said analysts at Credit Suisse on Monday, in a note initiating a 5,000 target for the large-cap benchmark for the end of next year.

Credit Suisse stuck to its year-end 2021 target of 4,600, a gain of 3.7% from the index’s Friday close. But stocks could struggle in the near term, they said, as investors wade through issues including a resurgence in COVID-19 infections and the eventual wind-down of the Federal Reserve’s asset-buying program.

“Over the past five quarters, analysts have significantly underestimated EPS (earnings per share), a trend we expect to continue,” wrote analysts led by Jonathan Golub, chief U.S. equity strategist and head of quantitative research (see table below).

Credit Suisse

“While economic data disappointed, input costs surged, and inventories destocked, EPS topped estimates by 16% in 2Q on stronger revenues (+5%) and margins (+11%),” they wrote. “We see upside to estimates as empty shelves are restocked and pricing power is maintained. Consumer spending should improve as the unemployment rate drops further, accompanied by higher wages.”

Need to Know: If the S&P 500 breaks above this key level, it could set off an ‘epic emotional squeeze’ not unlike 1999, strategists warn

The S&P 500

ended Friday at 4,436.52, its 44th record close of 2021. The Dow Jones Industrial Average

ended last week at 35,208.51, also a record, while the Nasdaq Composite

finished at 14,835.76, just 0.4% off its all-time highest finish.

Stocks were mostly lower Monday as investors looked for direction and weighed the implications for the global economy of the continued spread of the delta variant of the coronavirus that causes COVID-19.

Read: Goldman downgrades China growth, citing delta variant’s spread

Strategists at Goldman Sachs last week lifted their S&P 500 targets for both this year and next, citing better-than-expected earnings and lower-than-expected interest rates. Goldman lifted its 2020 target to 4,700 from 4,300 and moved its 2022 target to 4,900 from 4,600.

The analysts lowered their forecast for the price-to-earnings ratio to 20 times earnings from 21.4, reflecting what they said were understandle concerns about the recent spike in COVID-19 cases, “uncertainty around government stimulus and tax rates, the pending withdrawal of quantitative easing by the Fed, and elimination of supplemental unemployment benefits and forbearance” — all of which are “likely to weigh on markets over the near term. ”

Depressed Treasury yields, with the rate on the 10-year note

dipping below 1.15% last week before bouncing back toward 1.30%, similarly “cast a shadow on investor confidence,” they said.

The analysts acknowledged that an outlook based on stronger earnings and lower price-to-earnings ratio “might appear contradictory,” but noted that “each of these trends has been in place for the past year.”

Read next: RBC’s Calvasina says value stocks may be on brink of staging their ‘last hurrah

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