Broker Unicapital Securities Inc. has revised its year-end forecast for the Philippine Stock Exchange index (PSEi) to 7,100 points, down from a previous projection of 7,800, but still implying a 9 percent gain from the 2024 close of 6,528.
With the PSEi closing at 6,227.87 as of Wednesday, the market would need to rally 873 points by year-end to meet this target. Despite the lower outlook, Unicapital analysts say deeply discounted valuations present upside potential if macroeconomic conditions stabilize.
Analyst Peter Louise D. Garnace noted the PSEi is trading at a forward price-to-earnings ratio of 9.7 times, significantly below its 10-year average of 15.5 times. The price-to-book ratio is also subdued at 1.2–1.3 times versus a long-term average of 1.8 times.
“These reflect persistent risk aversion, muted earnings visibility, and weak investor sentiment. However, these also suggest ample room for a valuation rerating,” Garnace said.
Unicapital presented multiple scenarios: a bear case sees the PSEi bottoming around 6,500 points amid macroeconomic headwinds; a bull case envisions 7,400 points, supported by lower inflation, easing policy rates, and stronger-than-expected growth.
Company president Marlyne Y. Fernandez emphasized the significance of current earnings resilience and sector strength in consumer goods, REITs, and utilities. “The PSEi’s rebound to 6,350 is more than just a correction. It reflects an 8 percent earnings growth outlook,” she said.
Unicapital forecasts 8 percent EPS growth in 2025 and sees further BSP rate cuts next year as key to boosting corporate performance and household consumption. Inflation is now expected to ease to 2 percent by year-end, revised down from 3.1 percent due to falling rice and oil prices.
The firm also downgraded its GDP growth forecast to 5.5 percent for 2025 but noted the Philippines will still outpace the regional average of 4.2 percent, driven by consumer spending, infrastructure projects, tourism, and remittances.
For the regulator and market stakeholders, Unicapital’s outlook suggests cautious optimism. While current valuations indicate underperformance, they also point to a possible rerating if investor sentiment rebounds.
The direction of monetary policy and macroeconomic recovery will be pivotal in restoring market confidence and attracting investment flows as the country positions for broader Southeast Asian leadership in 2025.
