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GOLDMAN SACHS: 1300 HERE WE COME!

It’s difficult to find an analyst on Wall Street who isn’t very bullish right and the analysts at Goldman Sachs are no exception.  David Kostin, Goldman’s Chief Equity Strategist, says the S&P 500 could hit 1,300 by the middle of this year.  They say mutual funds and hedge funds will be forced to chase the indices as they’ve lagged thus far:

“Core mutual funds returned 5% reflecting underweight positions in Consumer Discretionary which surged 14% in two months, twice the market rebound. We expect the S&P 500 to rise to 1300 by mid-year (+10%), before ending 2010 at 1250 (+5%).”

They also believe the earnings picture is relatively healthy and expect $76 S&P EPS for 2010 and $90 for 2011.  This makes equities modestly priced and still very attractive:

“Our top-down EPS forecasts of $76 and $90 for 2010 and 2011 reflect +33% and +20% growth, respectively.  Top-down the S&P 500 trades at an NTM P/E of 15.7X (14.7X on pre-provision EPS). Bottom-up, it trades at an NTM P/E of 15.1X and LTM P/B of 2.5X.”

Source: GS

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