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Broader market earnings will go nowhere subsequent 12 months, in keeping with Goldman Sachs’ newest forecast.
Strategist David Kostin stated S&P 500 (SP500) (NYSEARCA:SPY) margins have inflected downward and consequently he’s trimming the S&P EPS forecast for 2023 to 0% progress from 3%.
“Following a weak 3Q earnings season by which S&P 500 web margins declined 12 months/12 months for the primary time for the reason that pandemic, we decrease our EPS forecasts for 2022 (to $224 from $226), 2023 (to $224 from $234) and 2024 (to $237 from $243),” Kostin wrote in a word. “The revised estimates mirror annual progress of seven%, 0%, and 5%, respectively.”
“Our topdown estimates are beneath bottom-up consensus forecasts for 2023 and 2024. We keep our year-end 2022 and 2023 index targets of 3600 (-5%) and 4000 (+6%),” Kostin stated.
The exception to margin contraction is Power (XLE).
“The backdrop of excessive oil costs and capex self-discipline has supplied an earnings tailwind to Power corporations,” Kostin stated. “Web margins in the course of the first three quarters of the 12 months equaled 14%, the best degree on file.”
“Power EPS has grown from 4% of S&P 500 EPS in 2019 to 11% immediately. Whereas our top-down mannequin suggests Power margins ought to modestly contract in 2023 and 2024, the upper degree will present a tailwind to index web revenue margins relative to the 2019 degree of 10.7%.”
Gross sales progress forecasts are unchanged at 12% in 2022 and 4% in 2023 and 2024.
See the earnings on faucet this week.
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