Goldman cuts its 2023 earnings forecast to 0%

Broader market earnings will go nowhere subsequent 12 months, in response to Goldman Sachs’ newest forecast.

Strategist David Kostin mentioned S&P 500 (SP500) (NYSEARCA:SPY) margins have inflected downward and in consequence he’s trimming the S&P EPS forecast for 2023 to 0% progress from 3%.

“Following a weak 3Q earnings season during which S&P 500 internet margins declined 12 months/12 months for the primary time for the reason that pandemic, we decrease our EPS forecasts for 2022 (to $224 from $226), 2023 (to $224 from $234) and 2024 (to $237 from $243),” Kostin wrote in a be aware. “The revised estimates mirror annual progress of seven%, 0%, and 5%, respectively.”

“Our topdown estimates are beneath bottom-up consensus forecasts for 2023 and 2024. We preserve our year-end 2022 and 2023 index targets of 3600 (-5%) and 4000 (+6%),” Kostin mentioned.

The exception to margin contraction is Vitality (XLE).

“The backdrop of excessive oil costs and capex self-discipline has offered an earnings tailwind to Vitality companies,” Kostin mentioned. “Web margins through the first three quarters of the 12 months equaled 14%, the best stage on file.”

“Vitality EPS has grown from 4% of S&P 500 EPS in 2019 to 11% immediately. Whereas our top-down mannequin suggests Vitality margins ought to modestly contract in 2023 and 2024, the upper stage will present a tailwind to index internet revenue margins relative to the 2019 stage of 10.7%.”

Gross sales progress forecasts are unchanged at 12% in 2022 and 4% in 2023 and 2024.

See the earnings on faucet this week.