"The unpredictability of the administration regarding tariffs/trade combined with a late cycle economy and a Fed seemingly on hold makes a 16x multiple now unreasonable, and 15x seems much more appropriate," Tom Essaye, the founder of the Sevens Research Report newsletter, said in a Friday note to clients.
With that earnings multiple and a 2020 S&P 500 EPS forecast of $180, a "reasonable downside target" is now 2,700, Essaye wrote. That implies a drop of about 3% off current levels.
At the same time, there are "real doubts" over whether that $180 estimate can even hold up, particularly if the international-trade conflict deepens, he said.
Stocks plunged Friday on the heels of Trump's announcement, and have since recovered their losses. US equity markets on Tuesday were firmly in positive territory, with the Dow Jones Industrial Average up more than 400 points.