Goldman Lifts S&P 500 Target to 5,200 on Profit Expansion

(Bloomberg) -- Just months after setting a 2024 target for the S&P 500 Index, Goldman Sachs Group Inc. strategists have boosted their forecast for a second time as the stock market eclipsed the significant 5,000 milestone this month.
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“Increased profit estimates are the driver of the revision,” a team led by David Kostin wrote in a note to clients dated Friday.
Kostin now sees the S&P 500 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 implies a 3.9% jump from Friday’s close.
In November, he initially projected the S&P 500 would hit 4,700 by the end of this year.
Goldman’s 5,200 price target for the S&P 500 in 2024 is now among the highest on Wall Street, joining the ranks of Wall Street bulls including Tom Lee of Fundstrat Global Advisors and Oppenheimer Asset Management chief strategist John Stoltzfus, who both hold a similar year-end outlook.
The firm’s strategists upgraded their earnings-per-share forecast for the year to $241 and $256 in 2025, from $237 and $250 previously. That reflects their expectation for “stronger economic growth and higher profits” for the information technology and communication-services sectors, which contain five of the so-called Magnificent Seven stocks including Apple Inc., Microsoft Corp., Nvidia Corp., Alphabet Inc. and Meta Platforms Inc. The new estimate sits above the median top-down strategist forecast of $235.
The firm’s strategists expect valuation multiples for both the S&P 500 and its equal-weight brethren to remain close to current levels — at 20 and 16 times earnings, respectively, “making earnings growth the primary driver of remaining upside this year.”