In an interview with CNBC on the floor of the New York Stock Exchange on July 11, 2018, Goldman Sachs Chief US Equity Strategist David Kostin spoke.
Brendan MacDermid | Reuters
London — Substantial disruption of the US technology sector is paramount to 2022 investors. Goldman Sachs Chief US Equity Strategist David Kostin.
US technology plummeted in the first week of the year, Nasdaq 100 Before temporarily entering the correction area on Monday, we gathered to record a four-day streak. on the other hand, S & P 500 It suffered the second worst opening week since the collapse of Lehman Brothers.
Investor depression is driven primarily by the outlook for a high interest rate environment, and the Fed has been more hawkish in the past month. The market is currently preparing for potential interest rate hikes as well as tightening the central bank’s balance sheet.
As a result, analysts are widely 2022 is expected to be a tough year for high growth The name of the engineer who has benefited from the ultra-loose monetary policy required by the Covid-19 pandemic as the stimulus unravels.
“The biggest mispricing in the US stock market is between companies with high expected revenue growth but low or negative margins and high-growth companies with positive or very significantly positive margins. It was dramatically adjusted last year, “Kostin told CNBC on Monday prior to the Wall Street Giants’ Global Strategy Conference.
Kostin emphasized that in February 2021, high-growth, low-margin stocks were traded at 16 times corporate value vs. sales. The corporate value-to-sales ratio helps investors value a company by considering its sales, stocks, and liabilities. ..
According to Costin, these stocks are currently trading at about seven times the EV / sales.
“Much of that happened last month or so, mainly because as interest rates rise, the valuation or value of that future cash flow depreciates somewhat in a higher interest rate environment,” Kostin said.
“This is a big issue, and I think the gap between the two is the biggest topic of conversation with clients. There was probably a big derating of companies with low profit margins and high expected revenue growth. , There is still more work to be done to readjust it. “
He argued that the gap between these two strains remained fairly narrow and would probably widen. Kostin said this can take the form of a company that is highly valued for both rapid growth and high profit margins, or a company that has a lower or negative rate of return further receding.
“It, broadly speaking, comes down to the relationship between interest rates and equities, the speed and magnitude of change, and especially the idea of profit margin, which is an important topic for fund managers. It is very important in interest rate changes. The environment we are experiencing now. “
Goldman’s David Kostin says technology disconnection is the “single biggest mispricing” of U.S. stocks.
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