The rally in US stocks has brought valuations to levels where they no longer price in a contraction in earnings, posing a risk to the recovery, according to Citigroup Inc. strategists.
Current prices are “too optimistic,” strategists led by Robert Buckland wrote in a note. The MSCI USA index is now implying a 4% earnings-per-share growth next year, close to the analyst consensus but far from Citi’s expectation of a 3% contraction, the team noted.
