A team of equity analysts at Goldman Sachs Group GS cut their expectations for S&P 500 earnings growth through 2024, citing a plethora of headwinds that will likely continue to weigh on corporate profit margins.
The team, led by Goldman’s top equity strategist, David Kostin, lowered its 2023 EPS growth forecast to 0%, while anticipating that profits will grow only modestly the following year. Analysts cited a contraction in net margins seen during the third-quarter earnings season as the inspiration for its changing outlook.year/year for the first time since the pandemic, we lower our EPS forecasts forShould the U.S.
“Firms continued to face a challenging margin backdrop. In 3Q, the GS wage tracker equaled 5.4%, Brent crude oil price was 9% above a year ago, goods inflation averaged 5.6%, and services inflation averaged 4.6%,” Kostin said. “As a result, S&P 500 net margins fell by 43 bp in the quarter, better than the 75 bp drop originally anticipated. But Energy distorts the results: Net margins fell by 137 bp ex-Energy, slightly worse than consensus forecasts at the start of the season,” Kostin said.Kostin and his team left their year-end S&P 500 price targets for 2022 and 2023 unchanged at 3,600 and 4,000 after repeatedly cutting its target for year-end 2022, as MarketWatch reported in September.
Will some of these 'headwinds' be due to windfall taxes, mayhaps?
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