US profit margin estimates are too optimistic, putting stocks at risk of more declines when Wall Street analysts downgrade their expectations, according to Goldman Sachs Group Inc. strategists.
“While rotations within the equity market have signaled expectations of slowing growth, index valuation does not appear to be providing a buffer for the uncertainty around the path of future earnings,” strategists led by Ben Snider wrote in a note dated June 27. Profit margins for the median S&P 500 company will likely decline next year, whether or not the economy falls into recession, the strategists said.
