Trimming our S&P 500 earnings forecast and 3 key issues for 2016
We lower our S&P 500 EPS forecast by $3 to $106, $117, and $126 for 2015, 2016, and 2017, reflecting annual growth of -7%, +11% and +8%, respectively. Energy is the leading driver of our reduced profit outlook. The sector will post a decline in operating EPS for the first time in 48 years. Three issues for the new year: (1) S&P 500 margins will hover just below 9% but Information Technology margins will peak this year and fall in 2017; (2) Energy EPS recovery will be limited; and (3) Economic expansion will be modest. 6% upside to our year-end 2016 index target of 2100.