Goldman Sachs Raises S&P 500 Price Target on Earnings Strength
Goldman Sachs Boosts Year-End Target to 5200
Goldman Sachs equity strategists have increased their year-end target to 5200 from 5100, suggesting a potential 4% upside from current levels.
S&P 500 Index Closed Lower
On Friday, the S&P 500 index closed at 5005.56, marking a 0.4% decrease for the week.
Profit Estimates Raised
This adjustment reflects heightened profit estimates, with the new 2024 EPS forecast now at $241, showing an 8% upward revision that exceeds the median top-down strategist forecast of $235.
Earnings Season Highlights
“The nearly-completed 4Q earnings season highlighted the ability of corporates to sustain profit margins despite slowing inflation,” analysts noted in a Friday report.
Optimism Fueled by Expectations of Stronger Growth
Analysts are optimistic due to expectations of stronger economic growth and higher profits in the Information Technology and Communication Services sectors, home to 5 of the “Magnificent 7” stocks.
Fundamental Strength of Mega-Cap Stocks
“The fundamental strength of the mega-cap stocks should also boost aggregate S&P 500 profits in 2024,” the report mentioned.
Upward Risks and Valuation Multiples
Goldman Sachs anticipates that stable P/E valuation multiples will primarily fuel further upside, mentioning potential upside risks to their EPS forecasts and key risks that would facilitate a pullback in the S&P 500 amid falling earnings forecasts.
On the other hand, a pullback would be likely if there is “disappointing growth in the macroeconomy or from the largest stocks,” the report explained.
