Goldman Sachs’ chief U.S. equity strategist, David Kostin, sees the downside risk to S&P 500 estimates in case the U.S. enters into a recession.

Kostin believes the S&P 500 firms are likely to clear the “low bar” as the current EPS growth consensus sits at “just” +6% year/year.

However, the strategist sees the risk on the commentary front, which is likely to “prompt cuts to forward estimates.”

“In our baseline, assuming the economy avoids recession, we forecast EPS growth of +8% in 2022 (vs. +10% for consensus) and +6% in 2023 (vs. +9%) and a rise in the S&P 500 index to 4300. In a moderate recession, our model implies 2023 EPS would fall by 11% to $200 (vs. current consensus of $250),” Kostin told clients in a note.

In case the S&P 500 EPS falls to $225, Kostin sees the S&P 500 falling to 3150.