Investors should be prepared for relatively muted returns on major equities in 2018, according to strategists at investment bank Societe Generale.

Robust earnings, subdued inflation, synchronized global growth and central banks looking to tighten monetary policy have all underpinned equities in 2017. However, the next calendar year does not likely to follow the same pattern, SocGen analysts said Thursday.

“We do not see much upside on our major equity targets for the next 12 months,” strategists at SocGen said in a research note.

U.S. stocks have been on fire this year. The S&P 500 is up more than 15 percent in 2017, boosted by strong corporate earnings, expectations of a U.S. tax code overhaul and improving global economic conditions. Monetary policy — which has been a boon for stocks since the financial crisis — also remains loose compared with historical standards.

But analysts at the investment bank said the S&P 500 was now “entering expensive territory.”

On Monday, Alain Bokobza, head of global asset allocation at SocGen, said U.S. stocks were comparable to a boiling frog that doesn’t realize the trouble surrounding it.

“We expect stretched valuations and rising bond yields to limit equity index performances in 2018 and the prospect of a U.S. economic slowdown in 2020 to further cramp returns in 2019,” he said.

Meanwhile, in Europe, an improving economic outlook continues to fuel equity valuations. In 2017 to date, European equities have risen more than 7 percent.

However, SocGen analysts said Europe’s economic growth over the coming months would likely strengthen the euro. And, as a result, the better-valued single currency would subsequently act as a headwind to profit over the coming year.

—CNBC’s Fred Imbert contributed to this report.