Goldman Strategist Cohen Cuts Stock Targets but Still Sees Gains

Goldman Sachs & Co. market strategist Abby J. Cohen--long one of Wall Street’s biggest bulls--on Wednesday tempered her enthusiasm for stocks, though she still predicted out-sized equity gains for share prices by 2004.

Cohen, who despite this year’s market slide has maintained ambitious 12- to 18-month price targets for the Dow industrial average and the Standard & Poor’s 500 index, cut those estimates by 12% and 4.4%, respectively.

She now expects the Dow to reach 10,800 in 12 to 18 months, down from 11,300. Her estimate for the S&P; 500 was reduced to 1,150 from 1,300.

Even so, her new targets represent gains of 48% for the indexes from Wednesday’s levels.

Cohen was ranked Wall Street’s top market guru in the 1990s, but she has lost that title as the bear market has dragged on, slashing the S&P; 500 nearly in half during the last 30 months.

In a note to clients, Cohen said that despite the “economic uncertainty” dogging markets, corporate profits are rising and “the worst is past.”

Cohen isn’t alone in continuing to cheer on the market. Wall Street strategists, on average, expect the S&P; to end 2003 at about 1,180, according to a recent Reuters poll.

But few strategists enjoyed Cohen’s stature in the 1990s as a market oracle. That has made her a bigger target for critics in the last two years as her forecasts have proved far off track.

In January 2001, she said the S&P; 500 would rise 25% that year. Instead, the index fell 13%.

Explaining the market’s current woes, Cohen said investors have assigned an ever-higher “risk premium” to stocks since the terrorist attacks last year. Cohen “did not anticipate the current extreme reading [of risk aversion], which is near the highs of the past three decades,” she said. Nonetheless, that risk aversion should decline in the next 18 months, she said.