The good news is that consensus forecasts point to a strong recovery in 2024 with the US and World ex US forecasts to deliver +12.3% and +11.6% respectively (see table below).
However, the one caveat is that the growth forecasts have started to nudge lower.
Exhibit 1: Regional consensus 2024 EPS growth forecasts
US 2024 EPS growth rate revisions are tracing last year’s negative revision profile
In Exhibit 2, we compare the trajectory of US 2023 consensus EPS growth forecasts (blue line line) v the trajectory of 2024 EPS forecasts (black line). Although this year’s forecasts are starting from a higher base, we seem to be seeing a similar profile to last year with analysts ratcheting growth rates lower as the year progresses.
Exhibit 2: US 2024 EPS forecasts revisions are retracing the 2023 profile
More than half of the US 2024 EPS growth is dependent on the contribution from the tech sectors
In Exhibit 3 we show that the US tech sectors are forecast to contribute 6.6% of the total market growth rate of 12.3% (more than half). By contrast the World ex US has less dependency on the contribution from the tech sectors. This skew is both a positive but also a risk for the US market especially if the tech sectors experience negative revisions in Q3 & Q4.
Exhibit 3: Sector EPS growth contributions
Source: Wilshire Indexes and FactSet. Data as of May 20, 2024.
