Goldman Unveils Five New Scenarios For US Equities

In a best-case scenario, US equities could rise another 16% through year-end. That's according to Goldman's David Kostin, who raised his S&P target in light of "milder than average negative EPS revisions" and a higher modeled multiple. Kostin now sees the benchmark sitting near 5600 at year-end in his base case. The bank's old target was 5200. Long story short, Kostin was (past tense) assuming a year-end forward multiple of 19.5x on a lower bottom-up consensus 2025 EPS estimate. Although h

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5 thoughts on “Goldman Unveils Five New Scenarios For US Equities

  1. 5600, 5200, 5578, 6300, 5900, 4700, 4800. Unless there’s significant earnings surprises, or changes in interest rates.

    Come bonus time, he’ll likely be able to point out at least one correct prediction.

    1. Yeah, I mean, look: It’s easy to make that joke, and I go back and forth on whether to make it myself or not. But I gotta admit that over the years I’ve come to prefer these sorts of notes to stubborn adherence to a specific target. Nobody knows where a given benchmark’s going to end up over the near- to medium-term. It’s a complete crapshoot. Anyone who picks one target and ends up being “right” is only right by accident. Given that, I’d rather read a scenario analysis. And it’s worth noting that Kostin does a pretty good job of staying on the right side of things with his base case. Sure, he adjusts it (marks it to market) fairly often, but what can you do? This isn’t a job (forecasting benchmark equities) that’s conducive to success if success is accurately forecasting year-end index levels. Everyone knows that’s impossible.

  2. It’s hard to know where stocks go with all the variables. The consensus in my ria study group is to ignore politics. Look what just happened in France. Some good companies there corrected in double digits there due to politics. It could happen here as well. My base case basically is status quo in the US. Split Congress, Biden re-elected. How confident am I of this forecast? Not very much. Anyone who says with certainty where the stock market is going in the next 12 months is guessing. Don’t bet the farm.

    1. The market’s priced (theoretically) off consensus bottom-up, not any one bank’s top-down estimate. And it’s a forward multiple, which is to say the market’s going to price it in long before anybody knows what actual, realized earnings are for 2025. So, it’s 20.4 * $279 * 0.98 = 5,578 or ~5600 SPX

NEWSROOM crewneck & prints