Globe editors have posted this research report with permission of Scotia Capital Inc. This should not be construed as an endorsement of the report's recommendations. For more on The Globe's disclaimers please read here. The following text is excerpted from the report:
In the U.S., we believe mid-single digit top-line growth, higher-for-longer record margins, yield curve steepening, accommodative monetary conditions, and below-trend earnings will drive S&P 500 EPS growth over the next 18 months.
S&P 500-TSX earnings divergence has been visible since 2011 and could persist as weaker commodity prices weigh on the TSX EPS outlook. The lower Canadian dollar could be a silver lining, however, especially with resilient energy prices.
We are raising our S&P 500 EPS estimates to $108 (U.S.) for 2013 (up from $105) and $115 for 2014 (up from $112). For the 2013-2014 forecast period, we are looking for 18 per cent earnings growth for the S&P 500. Our 12 to18 month S&P 500 target moves up to 1,700 (was 1,550).
Our TSX earnings forecasts are now set at $825 (Cdn) for 2013 (down from $875) and $925 for 2014 (down from $950). We are looking for earnings growth of 12 per cent over the 2013-2014 forecast period. Our 12 to 18 month TSX target remains unchanged at 12,800.
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