(Bloomberg) — Just months after setting a 2024 target for the S&P 500 index, Goldman Sachs Group Inc. strategists revised their forecasts for the second time as the stock market topped the key 5,000 milestone this month. I raised it to .
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“Increased earnings expectations are the driving force behind the revision,” David Kostin and his team said in a note to clients dated Friday.
Kostin now sees the S&P 500 index rising to 5,200 by the end of this year, raising his forecast by about 2% from the 5,100 level he predicted in mid-December. The new target suggests a 3.9% rise from Friday's close.
He originally predicted in November that the S&P 500 index would reach 4,700 by the end of this year.
Goldman's 2024 S&P 500 price target of 5,200 is currently among the highest on Wall Street, with similar year-end targets such as Fundstrat Global Advisors' Tom Lee, Oppenheimer Asset Management's chief strategist, He joins the ranks of Wall Street bulls such as John Stoltzfus. Outlook.
The company's strategists raised their earnings per share forecast for this year to $241 and $256 in 2025, from $237 and $250. This reflects expectations for “stronger economic growth and higher profits” for the information technology and communications services sector, which includes five of the so-called Magnificent Seven stocks such as Apple Inc., Microsoft Inc., Nvidia Inc. and Alphabet Inc. are doing. The new estimate is above the median estimate of $235 from top-down strategists.
The firm's strategists expect valuation multiples for the S&P 500 and similar stocks to remain close to current levels, at 20x and 16x P/E, respectively, adding, “Earnings growth will maintain this year's upside.'' We anticipate that this will be the main driving force.”
The S&P 500 index has risen 4.9% this year, as hopes for a dovish policy shift from the Federal Reserve and optimism about artificial intelligence boosted tech stocks. The 500-member group's profits are expected to rise 8.8% from a year ago in 2024, according to data compiled by Bloomberg Intelligence.
The S&P 500 hit a new two-year high in January, and the Nasdaq 100 hit a new high in December for the first time in a similar period after the Fed signaled that its aggressive rate hikes to curb inflation were likely over. The highest value was recorded. Reductions are being considered for 2024.
Wall Street peers such as Bank of America have said they may also raise their year-end targets because they don't think investors are optimistic enough. The median target for the S&P 500 index by more than a dozen equity strategists tracked by Bloomberg currently stands at 4,950 through mid-January.
“The biggest risk to the S&P 500 in the near term is upside,” Bank of America's Savita Subramanian told Bloomberg TV earlier this month. She said: “Our target of 5,000 people is probably too low in the short term.”
Even Morgan Stanley's Michael Wilson, one of Wall Street's most prominent bears, believes that the U.S. stock market rally is currently getting less love than the big tech companies that have dominated previous bull markets. We expect it to expand into fields where it is not currently available. His 2024 target remains at 4,500, implying a decline of about 10% from Friday's close.
–With assistance from Elena Popina.
(Adds context to fifth paragraph.)
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