Goldman Sachs (GS) has raised its target for the benchmark S&P 500 index for the end of this year and the next 12 months, based on expected higher margin growth for corporates and a stable macroeconomic outlook through 2025.
The Wall Street broker on Friday raised the index target for the next 12 months to 6,300 from 6,000, and raised the current year-end target to 6,000 from 5,600.
Goldman's year-end target reflects an increase of 4.32% from the index's last close of 5,751.07 on Friday.
Goldman is also bullish on corporate America's earnings per share (EPS) growth, raising its 2025 EPS estimate to $268 from $256, reflecting an 11% year-over-year increase. The broker maintained its 2024 EPS forecast at $241.
"Our forward EPS estimates reflect a stable macro outlook and the primary driver for the upward revision to our 2025 EPS estimates is greater margin expansion," Goldman analysts led by David Kostin said in a note dated Friday.
Data in August showed that the US economy grew faster than expected in the second quarter, amid strong consumer spending, and recovering corporate profits, which are expected to help sustain this expansion.
"The macroeconomic background remains conducive to moderate margin expansion," said Kostin.
An uptick in mega-cap tech stocks and a recovery in the semiconductor industry cycle will continue to support the company's EPS growth, the broker added.
