Broker Unicapital Securities Inc. on Monday recomputed the benchmark Philippine Stock Exchange index (PSEi) to round the year higher to 7,600 points from 7,000 points previously on the back of still lower interest rates at the close of 2024.
“We expect further policy rate easing to boost corporate earnings through lower cost of capital and increased consumer spending. Based on our sensitivity analysis, our bear and bull case scenarios range from 7,000 to 8,000, based on 12 times and 13.7 times price per earnings (P/E) ratio, respectively, both of which are below the past five-year average,” the broker said.
This year, the target index is based on 13 times P/E and 17 percent earnings per share (EPS) growth, which is higher than the previous estimate of 11 percent.
For next year, the broker reset the PSEi to 8,400 points based on 13 times P/E ratio and anticipated 10 percent growth in EPS.
“It reflects the current market environment and investor sentiment. Our EPS growth estimate stems from earnings forecasts for the index constituents. Further rate cuts by the central bank are expected to support corporate profitability, potentially driving growth in key sectors such as conglomerates, consumer, energy, REITs and property,” the broker said.
In a bear scenario, it forecasts the PSEi falling to 8,000 based on a more cautious 12.5 times P/E that assumes headwinds such as slower-than-expected economic recovery or geopolitical risks. Conversely, in a more optimistic bull case, the index could reach 9,000, supported by a 14 times P/E that should still be lower than the 5-year average.
This leaves room for further upside should investor sentiment improve, the broker said.
Unicapital said it remains optimistic and poised to continue making impactful contributions to the Philippine economy, with a robust pipeline of upcoming deals and partnerships.
“At Unicapital, we take pride in being a dedicated partner to the Philippine private sector. Our ability to facilitate significant investment deals and provide financing integral to business growth and expansion—despite being an independent financial services provider—is a testament to our commitment in empowering businesses and driving sustainable economic growth,” Jaime Martirez, Unicapital Group president and CEO, said.
