Goldman cuts 2023 earnings forecast to 0%

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According to the latest Goldman Sachs forecast, earnings in the broader market are going nowhere next year.

Strategist David Kostin said the S&P 500 (SP500) (NYSEARCA:SPY) profits have dropped and as a result he is cutting S&P EPS forecast for 2023 to grow between 3% and 0%.

“After a weak third-quarter earnings season in which S&P 500 net margins fell for the first time since the pandemic, we lower our EPS forecast for 2022 (from $226 to $224), 2023 (to $224 from $234) and 2024 (to $237 from $243),” Kostin wrote in a note. “The revised estimates reflect year-on-year growth of 7%, 0%, and 0%, respectively. 5%.”

“Our top-down estimate is below the bottom-up consensus forecast for 2023 and 2024. We maintain our 2022 and 2023 end-of-year index targets of 3600 (-5%) and 4000 (+6%) ),” Kostin said.

The exception to shrinking margins is Energy (XLE).

“The backdrop of high oil prices and the discipline of investment has provided favorable returns for Energy companies,” said Kostin. “Net profit margin for the first three quarters equaled 14%, the highest on record.”

“Energy EPS has grown from 4% of the S&P 500 EPS in 2019 to 11% today. While our top-down model suggests Energy Margin should contract modestly in 2023 and 2024, higher will provide a headwind for net profit indexing compared to 2019 levels of 10.7%.”

Revenue growth forecast is flat at 12% in 2022 and 4% in 2023 and 2024.

View earnings mining this week.


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