Gold­man Sachs, BofA boost US stocks fore­cast

The Pak Banker - - Company& -

NEW YORK: Gold­man Sachs Group Inc. and Bank of Amer­ica Corp. raised their fore­casts for profit growth by Stan­dard & Poor's 500 In­dex com­pa­nies, cit­ing an im­prov­ing global econ­omy and record cash on cor­po­rate bal­ance sheets.

Ris­ing prof­its will push stock prices up while leav­ing the S&P 500 be­low the record high it reached in 2007, strate­gists at the firms said in re­ports to­day and yes­ter­day. At Gold­man Sachs, David Kostin pre­dicted the S&P 500 will end next year at 1,450, up 19 per­cent. Bank of Amer­ica's David Bianco raised his 12-month tar­get for the in­dex to 1,400 from 1,350.

Kostin fore­cast com­bined earn­ings per share for S&P 500 com­pa­nies of $84 in 2010, $94 next year and $104 in 2012 in a re­port dated Dec. 1. Bianco, chief U.S. eq­uity strate­gist at Bank of Amer­ica, in a re­port to­day es­ti­mated profit of $85 a share this year, $93 a share in 2011 and $99 a share in 2012. Earn­ings peaked at $85.32 a share in 2007, ac­cord­ing to Bloomberg data.

"The path of earn­ings growth has rarely been smoother," Kostin said in the re­port. "The key macroe­co­nomic in­puts to our sales, mar­gins and earn­ings mod­els all rep­re­sent tail­winds at this time."

Im­prov­ing U.S. and global eco­nomic growth will boost sales, and com­pa­nies are likely to use cash for share buy­backs, div­i­dends and ac­qui­si­tions, the strate­gists said. Low in­ter­est rates and in­fla­tion will also sup­port gains in stock prices, they said. The S&P 500 peaked at 1,565.15 in 2007. It rose 1 per­cent to 1,218.22 as of 1:32 p.m. in New York to­day. -PB News

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