At the end of 2018, Goldman Sachs’ (GS) chief equity strategist, David Kostin, expected the S&P 500 (SPY) to reach 3,000 by the end of 2019. He maintains that target. The estimate implies an upside of 19.7% from the S&P 500’s level at the end of 2018.
Like Morgan Stanley, Goldman Sachs is also concerned about a possible earnings slowdown. As reported by CNBC, Kostin said, “All 11 sectors have experienced negative 2019 EPS revisions since the start of the year.” He also said, “As margin pressures mount, investors should focus on companies that have demonstrated the ability to maintain margins through pricing power.”
Goldman Sachs thinks that the S&P 500 companies’ margins could fall to levels that haven’t been seen since the financial crisis. Goldman Sachs screened several stocks for higher pricing power. Goldman Sachs identified Nike (NKE), Home Depot (HD), Coty (COTY), and Adobe (ADBE) as the companies with high pricing power.