S&P 500 companies’ earnings per share will rise 5% to $237 this year, Goldman strategists led by David Kostin have predicted. That’s already above the median $231 forecast of strategists tracked by Bloomberg, and the firm sees numerous factors leading into the coming fourth-quarter earnings season that may help companies beat that figure.
“We see potential upside to our EPS estimate from stronger US economic growth, lower interest rates, and a weaker dollar” despite lower oil prices, the strategists said. “The bar ahead of fourth-quarter results is higher than in recent quarters, but we expect S&P 500 firms in aggregate will beat analyst forecasts.”
Kostin already upgraded his view on the S&P 500 last month, taking his year-end forecast for the index to 5,100 from the 4,700 he had set just the month before. At that time, he also said that the earnings prediction might be too pessimistic, thanks to looser financial conditions.
At the end of 2022, Kostin had expected the S&P 500 to gain just a few percent to 4,000 as of year-end 2023, making him one of numerous strategists to initally miss predicting the 24% rally that took the benchmark to 4,769.83 at the close of the year.