Goldman lifts S&P 500 target to 5,200 on profit expansion

JUST months after setting a 2024 goal for the S&P 500 Index, Goldman Sachs Group strategists have boosted their forecast for a second time because the inventory market eclipsed the numerous 5,000 milestone this month.

“Increased profit estimates are the driver of the revision,” a staff led by David Kostin wrote in a word to shoppers dated Friday (Feb 16).

Kostin now sees the S&P 500 rising to five,200 by the top of this 12 months, elevating his forecast by about 2 per cent from the 5,100 stage he predicted in mid-December. The new goal implies a 3.9 per cent bounce from Friday’s shut.

In November, he initially projected the S&P 500 would hit 4,700 by the top of this 12 months.

Goldman’s 5,200 value goal for the S&P 500 in 2024 is now among the many highest on Wall Street, becoming a member of the ranks of Wall Street bulls together with Tom Lee of Fundstrat Global Advisors and Oppenheimer Asset Management chief strategist John Stoltzfus, who each maintain an analogous year-end outlook.

The agency’s strategists upgraded their earnings-per-share forecast for the 12 months to US$241 and US$256 in 2025, from US$237 and US$250 beforehand. That displays their expectation for “stronger economic growth and higher profits” for the data know-how and communication-services sectors, which include 5 of the so-called Magnificent Seven shares together with Apple, Microsoft, Nvidia, Alphabet and Meta Platforms. The new estimate sits above the median top-down strategist forecast of US$235.

The agency’s strategists anticipate valuation multiples for each the S&P 500 and its equal-weight brethren to stay near present ranges – at 20 and 16 occasions earnings, respectively, “making earnings growth the primary driver of remaining upside this year”.

The S&P 500 Index has climbed 4.9 per cent this 12 months, fuelled by expectations of a dovish coverage shift by the Federal Reserve and as synthetic intelligence optimism lifted know-how shares. Profits within the 500-member gauge are anticipated to develop 8.8 per cent in 2024 from a 12 months in the past, information compiled by Bloomberg Intelligence present.

The S&P 500 topped its all-time peak for the primary time in two years in January, whereas the Nasdaq 100 hit its first file in an analogous span again in December after the Fed signalled that its aggressive fee hikes to include inflation are probably over and cuts are on the desk for 2024.

Wall Street friends comparable to these at Bank of America have signalled their willingness to probably elevate their year-end targets as nicely on the concept traders aren’t optimistic sufficient. The median S&P 500 goal by practically a dozen fairness strategists tracked by Bloomberg at present sits at 4,950 to mid-January.

“The biggest risk to the S&P 500 in the near term is upside,” Savita Subramanian of Bank of America stated on Bloomberg TV earlier this month. “Our target of 5,000 is probably too low in the near term.”

Even Morgan Stanley’s Michael Wilson – among the many most outstanding bearish voices on Wall Street – is now anticipating positive aspects within the US fairness market to broaden into much less cherished corners than the massive tech firms which have dominated the rally to this point. His 2024 goal stays 4,500, implying a roughly 10 per cent drop from Friday’s shut. BLOOMBERG