Irish share prices should rise by an average of 16 per cent next year and corporate earnings should increase by 18 per cent, according to Goodbody stockbrokers. The review was published as share prices reached another high on the Dublin market, with the ISEQ index rising by 1.16 per cent to another closing high of 4009.02.

In a review of the equity market, Goodbody forecasts that a number of Irish shares will outperform their international peers in 1998 due to factors such as their exposure to the strong Irish economy and recent major acquisitions. Share prices should rise by about eight per cent on average in Britain next year, by 12 per cent in the US and strong growth is forecast for continental European markets.

Goodbody is forecasting growth of eight per cent in Irish gross national product next year, providing additional growth opportunities for Irish companies.

Jefferson Smurfit, Waterford Wedgwood and AIB shares are expected to show the biggest price rises, with increases of 21 per cent, 19 per cent and 19 per cent, the brokers forecast. Smurfit is seen as a recovery stock, benefitting from improvements in prices in its core packaging businesses and from an expected restructuring of its US operations.

Waterford Wedgwood has successfully moved from its restructuring and recovery phase into a strong growth phase driven by a combination of good sales growth and significant efficiency benefits from investment in new technology and automation, according to Goodbody. The brokers are forecasting earnings per share growth of over 15 per cent per annum over the next three years.

An overweight position in the banks is recommended because of the reductions in corporation tax next year, the continuing high rate of credit growth and the good credit quality. The AIB share price is expected to rise by 19 per cent and Bank of Ireland by 17 per cent. Greencore is recommended as a recovery stock with a price rise of 17 per cent forecast.

CRH is expected to benefit from the buoyancy of the Irish construction sector as well as its recent US acquisitions, with a forecast price increase of 17 per cent. Independent Newspapers is as seen as benefitting from the strength of the Irish economy and from its strategic geographic diversification. A 16 per cent rise in the share price and a 20 per cent increase in earnings per share is forecast for 1998.

But the brokers recommend underweight positions in Irish Permanent and Irish Life because their current share prices "are well up with events". They are forecasting a seven per cent rise in the Irish Permanent share price and a four per cent increase at Irish Life.

Among the merging shares Goodbody recommended Galen as "an attractive investment opportunity". The brokers forecast earnings per share growth of over 25 per cent per annum in the next few years with a possible "leap forward by a much higher percentage in 2000" with the inception of new products.