The Wall Street giant, Goldman Sachs lowers its 2019 earnings per share estimate for S&P 500 by $6, in spite of the earnings squeeze, Goldman Sachs is still positive on a further rise, for stock markets.
“Economic growth has been below-trend, oil prices have been range-bound, and tariff uncertainty has not abated,” analysts led by chief U.S. equity strategist David Kostin, said.
“The dovish Fed pivot has driven the equity market rally in 2019, and we expect low interest rates will continue to support above-average valuations going forward,” the note said.
At the start of the year, EPS is an important metric for traders to gauge the value of a stock, in a research note, Goldman predicted that 2019 EPS growth would likely equal range from 3% to 6%, but now expects it will hit the lower end. The company raised its 2019 year-end price target for the U.S. benchmark S&P 500 index by 3% to 3,100 on Tuesday, citing weakness in economic activity and the margin outlook.
New price target for the S&P 500 shows a 24% full year gain for 2019 and also set a 2020 year-end price target of 3,400, a 10% rise from the 2019 target.
Investors are hoping for the Federal Reserve to trim the interest rates by a quarter-point on Wednesday, with some of the analysts pricing in a further cut before the end of the year.
The analysts at Goldman Sachs suggested several strategies for investors, including to “add selective exposure to cyclical equities such as transports” on the expectation that “easy financial conditions, among other factors, should lift U.S. economic growth from its depressed pace of 1% in June.”