Goldman Sachs Raises Its Year-End Target For The S&P 500 To 4,500, Anticipating An Increase Of 5%

Goldman Sachs has revised its year-end target for the S&P 500, raising it to 4,500, driven by a broadening rally that extends beyond the largest technology companies.

This new target represents approximately a 5% upside from the current levels of the broad-market index and marks an increase from Goldman's previous target of 4,000.

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In a note issued on Friday, David Kostin, Chief U.S. Equity Strategist at Goldman Sachs, stated that the firm maintains its 2023 earnings-per-share (EPS) forecast for the index at $224. This EPS projection assumes a soft landing and surpasses the top-down consensus of $206.

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Kostin acknowledged that the price-to-earnings (P/E) multiple of 19x is higher than anticipated, primarily driven by a few mega-cap stocks. However, he noted that historical instances of significant narrowing breadth have been followed by a "catch-up" from a broader valuation re-rating.

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Year to date, the S&P 500 has gained nearly 12%. While the index recorded a modest 0.1% increase on Friday, it briefly surpassed the 4,300 level during the session, a level not reached since August.

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Although a handful of prominent tech stocks, such as Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta, and Tesla, have been among the top performers in the S&P 500 this year, other sectors are also showing signs of strength. For instance, the Utilities Select Sector SPDR Fund (XLU) has risen approximately 2% this week.

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