December 28, 2023
The 2024 consensus EPS forecast is +11% or $245/share. When we plug Wall Street analysts’ rosy EPS forecasts into the RiskBridge earnings model, they imply a 2024 US real GDP growth rate of around 3.2%. While possible, we do not think 3% real GDP growth is plausible following a 5.25% Fed rate hike cycle.
Put another way, the consensus economic forecast calls for 1.2% real GDP in 2024. If true, this implies next year’s EPS will be closer to $217/share or a growth rate of -2%, not 11%. We believe downward EPS revisions are a greater risk than upward GDP growth revisions in early 2024.
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