S&P 500 earnings estimates for 2023 take 'complete U-turn' as recession risks loom, according to BofA

  • 📰 MarketWatch
  • ⏱ Reading Time:
  • 45 sec. here
  • 2 min. at publisher
  • 📊 Quality Score:
  • News: 21%
  • Publisher: 97%

United States News News

United States United States Latest News,United States United States Headlines

Estimates for S&P 500 earnings per share, or EPS, in the fourth quarter are down 4.3% since the beginning of October, or 2.5 times the typical estimate cut “at this point in earnings season,” BofA equity and quant strategists said in a research note.

The S&P 500 risks another leg down after a “complete U-turn” in 2023 earnings-per-share estimates for the U.S. stock-market index, according to a BofA Global Research note.

The above chart shows how 2023 EPS revisions stack up against the historical average, while also considering exclusions of the COVID-19 crisis and 2008 global financial crisis. Analysts at Goldman Sachs Group said in a research note Friday that they lowered their 2023 EPS growth forecast to 0%, from a previously expected increase of 3%, after the S&P 500’s net margins contracted in the third quarter for the first time since the pandemic on a year-over year basis. They wrote that “weak” third-quarter margins presage “a headwind” next year.

Their forecast for a 9% earnings drop in 2023 should translate into an increase in the equity risk premium of 100 basis points, according to the note. And that size increase translates into an S&P 500 price of around 3,200 based on today’s rates, they said, pointing to a 1.7% real yield for the 10-year Treasury note.

 

Thank you for your comment. Your comment will be published after being reviewed.
Please try again later.
We have summarized this news so that you can read it quickly. If you are interested in the news, you can read the full text here. Read more:

 /  🏆 3. in US

United States United States Latest News, United States United States Headlines