FAST FIVE: 3 Reasons Why Goldman Now Sees Almost No Upside For Stocks In 2021
3 Reasons Why Goldman Now Sees Almost No Upside For Stocks In 2021 Just over a month ago, in our preview of earnings season, we said that “Q1 earnings will be stellar, but are fully priced in and only guidance will matter”, and sure enough the broader market is now below where it was a month ago despite the strongest earnings season in modern history: with 90% of S&P500 companies having reported, the results show EPS rose by 46% year/year… .
We also raise our 2022 EPS estimate to $202 (from $197).
Our economists expect real US GDP growth will average +7% in 2021 and +5% in 2022.
The 5% earnings impact of tax reform that we model reduces our 2022 EPS estimate from $212 (10% growth) to $202 (5% growth) – see Exhibit 5 above.
This, together with other factors is why Goldman is turning increasingly cautious on the market and unlike many of its Wall Street peers, has refused to chase price action higher by lifting its S&P price target.