20150928-高盛-Lowering_S_P_500_earnings_forecast_and_index_price_targets_28页_1011kb

Summary of US Equity Views: S&P 500 Earnings and Price Forecasts

Core Content

Goldman Sachs has revised its forecasts for the S&P 500, lowering both earnings estimates and price targets due to slower economic growth in the US and China, along with lower oil prices than previously assumed. The updated forecasts reflect a more cautious outlook on the market's trajectory in the short and medium term.

Key Forecasts

• 2015 EPS Forecast: $109 (from $114), a 3% year-over-year decline.
• 2016 EPS Forecast: $120 (from $126), a 10% annual growth.
• 2015 Year-End Price Target: 2000 (from 2100), a 6% increase.
• 2016 Year-End Price Target: 2100, a 5% increase.
• P/E Multiple: Expected to fall from 16.4x to 16.1x by 2017, as interest rates rise.

Main Views

Economic Growth and Oil Prices

• US GDP growth is expected to be 2.4% in 2016, down from the previous assumption of 2.8%.
• World ex-US growth is projected at 3.7%, down from 4.3%.
• China's growth is expected to be slower than previously thought, with the CAI suggesting a 100 bp slowdown compared to official GDP data.
• Oil prices have declined significantly, with Brent crude expected to remain low for the foreseeable future, contributing to reduced earnings for the Energy sector.

Valuation Risks

• The S&P 500 currently trades at a high valuation of 16.4x top-down EPS, which is above the long-term average.
• A 100 bp increase in US GDP growth can impact EPS by $6, while a $10 drop in crude oil prices affects EPS by 0.8%.
• The Fed's December 2015 rate hike is expected to cause a decline in P/E multiples, as historically, rising rates have led to lower valuations.

Investment Recommendations

1. Call Writing: Investors should consider writing out-of-the-money calls to gather yield, especially in a low return environment.
2. Domestic-Facing Stocks (GSTHAINT): Focus on companies with high US sales exposure, as they are expected to outperform due to stronger domestic economic conditions and a stronger USD.
3. Cash Return Stocks (GSTHCASH): Invest in firms that return significant cash to shareholders through dividends and buybacks, which can provide better returns in a low-growth environment.
4. High Quality and Strong Balance Sheet Stocks (GSTHQUAL and GSTHSBAL): These stocks are expected to outperform as financial conditions tighten and investors seek safety.

Key Information

• The S&P 500 is expected to have a weak recovery post-correction in 2015, with a year-end level of 2000, which would be a 7% rebound from the August trough.
• The current P/E multiple is in the 83rd percentile for the median stock since 1976, indicating overvaluation.
• The Fed's rate hike in December is anticipated to constrain index gains and reduce valuations.
• Corporate buybacks, which represent the largest source of demand for US equities, are expected to peak in November and December, potentially boosting the market.
• The S&P 500's EPS is expected to rise modestly in 2016 and 2017, but at a slower pace than previously forecasted.
• The Energy sector is expected to contribute significantly less to S&P 500 EPS in 2015 due to the decline in oil prices, with EPS falling to $2 per share from $13 in 2014.

Sensitivity Analysis

• The sensitivity table shows that a 40 bp drop in US GDP growth or a $10 drop in crude oil prices significantly affects EPS forecasts.
• The P/E multiple is expected to gradually decline as the Fed raises interest rates, with the yield gap between equities and bonds also narrowing.
• The 2015 EPS forecast is slightly below the bottom-up consensus, but the 2016 forecast is more conservative than the current consensus.

Conclusion

Goldman Sachs advises investors to focus on strategies that capitalize on the expected low returns and limited upside in the S&P 500, such as call writing, domestic-facing stocks, and high-quality firms with strong balance sheets. The firm highlights the importance of macroeconomic factors like economic growth and oil prices in shaping these forecasts and suggests that the market may underperform compared to historical recovery patterns.