Goldman's Kostin Forecasts 'A Market That's at 2,100 at the End of This Year' on CNBC

Chief U.S. equity strategist, David Kostin, joined CNBC's 'Squawk on the Street' to discuss the future of the market.
By Giovanni Bruno ,

NEW YORK (TheStreet) --Chief U.S. equity strategist at Goldman Sachs, David Kostin, joined CNBC's "Squawk on the Street" on Tuesday to discuss the future in terms of the U.S. market, and tactics he's employing moving forward.

"I think about strategy and I think about tactics. The strategy is basically that U.S. equity market will generally rise in 2015, 2016, 2017. We have the economy growing little under 2% dry sales, margins coming down little bit, so modest growth and earnings would lead to a market that's at 2,100 at the end of this year. That's been my forecast and remains so." Kostin said.

"If you look at 2017 we're looking around 2,200. So that's a modest, shallow, upward trend in equity prices."

"From a tactical point of view there's more risk. We're looking at concerns about earnings, we have political uncertainty here in the U.S. This rise in political uncertainty would lead to a lower market. We have concerns about the blackout period in terms of corporate purchases are not likely going to be happening between now and the 5th of August. So when looking at a variety of near-term developments I would be more cautious, tactically, in the context of a generally higher market." Kostin explained.

Moreover, "a roughly 5% annualized total return on dividends, that would be the central case that we would put forward," Kostin said about forecasting the future.

"The big picture is you have a starting point of valuation, which suggest you have muting and limitation on the expansion. Number two, is the idea of revenue growth is associated with the economy and the US economy is growing at 2 or sub-2%, that's a modest level of growth. That's the kind of sales were seeing, and ultimately sales and earnings drive the market over time," Kostin added.

Finally, "If given the choice between a company that can boost dividends or one already paying it out, I would prefer to have dividend growth overtime. My forecast is about a 4% dividend growth over the next ten years," Kostin concluded.

Shares of Goldman Sachs are trading higher 2.55% to $155.87 late Tuesday morning

Separately, TheStreet Ratings rates Goldman Sachs as a "Hold" with a ratings score of "C."  The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks.

Among the primary strengths of the company is its expanding profit margins over time. At the same time, however, TheStreet Ratings also finds weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow."

TheStreet Ratings objectively rated this stock according to its risk-adjusted total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. 

You can view the full analysis from the report here: GS

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