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Pricey US Stocks Pose a Risk to 2023 Recovery, Say Citi Strategists

  • Stocks pricing in 4% EPS growth, Citi expects a 3% contraction
  • UK market most cautious among developed peers, Citi says

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.