S&P 500 should hit 4,700 by 2021-end, say Goldman Sachs analysts

The S&P 500 index is likely to rise 7% more this year to end 2021 at 4,700 as companies report strong earnings growth and the Federal Reserve maintains its pandemic-era monetary stimulus, Goldman Sachs analysts said.
 

They raised their 2021 price target for the benchmark U.S. stock index to 4,700 from 4,300, according to a note published on Thursday, implying a 25% rise this year. The index rose over 16% last year as ultra-low interest rates to lift the economy from a pandemic-led slowdown drove a sharp recovery in stocks.

It has posted six straight months of gains in 2021, rallying more than 17% as easing of COVID-19 restrictions helps drive economic growth and corporate earnings beat expectations. The index closed at 4,402.66 on Wednesday.
 

The analysts also raised the earnings per share forecast for S&P 500 companies in 2021 to $207 from $193, implying annual growth of 45%.
 

"We expect stronger revenue growth and more pre-tax profit margin expansion as firms successfully manage costs and as high-margin Tech companies become a larger share of the index," Goldman Sachs economist David Kostin said.

But the analysts warned that uncertainty around fiscal and monetary policy would likely drive volatility later in the year.