Market Analysis

S&P 500 index objective for year-end and the next 12 months is raised by Goldman Sachs

Amos Simanungkalit · 07 Oct 202420.3K Views

Goldman Sachs has revised its target for the S&P 500 index, projecting an increase for both the year-end and the following 12 months due to anticipated higher margin growth among corporate firms and a stable macroeconomic outlook extending through 2025.

On Friday, the Wall Street firm raised its 12-month index target to 6,300 from 6,000, while also increasing the year-end target from 5,600 to 6,000.

This new year-end target suggests a potential increase of 4.32% from the index's most recent closing value of 5,751.07 on Friday.

Goldman is optimistic about corporate America's earnings per share (EPS) growth, adjusting its 2025 EPS estimate to $268 from $256, indicating an 11% annual increase. The firm has kept its 2024 EPS forecast steady at $241.

"Our forward EPS estimates reflect a stable macro outlook... The key factor driving the upward revision in our 2025 EPS estimate is enhanced margin expansion," stated Goldman analysts, led by David Kostin, in a note released on Friday.

Data from August revealed that the U.S. economy outpaced initial growth expectations for the second quarter, bolstered by robust consumer spending and a rebound in corporate profits, which should help sustain the expansion.

Kostin noted, "The macro environment remains favorable for modest margin expansion."

Additionally, support from mega-cap technology stocks and a recovery in the semiconductor industry cycle will further bolster EPS growth for companies, according to the brokerage.