Companies listed on the Irish stock market should continue to deliver double-digit earnings growth this year and next, Davy Stockbrokers has said.

Despite a strong start to the year, the broker also believes that the ISEQ can continue to move ahead. The index, which recently broke through the 6,700 level into record territory, will finish 2005 at 7,500, some 11 per cent above current levels, Davy says.

The index is already up around 9 per cent so far this year, substantially outperforming its international peers. Davy believes it will record further gains over the remainder of the year to finish 21 per cent higher, building on last year's gain of 26 per cent.

Its performance should be underpinned by earnings growth of 11.2 per cent in the Irish market this year and 15.5 per cent in 2006, on top of last year's growth rate of 14 per cent, Davy said.

Despite its strong performance in recent years, Davy is not concerned that the Irish market is looking expensive relative to those elsewhere. The broker notes that Ireland, with a price/ earnings ratio of 12.7 times for 2005, still trades at a discount to the European average of 13.2 times and looks to have stronger earnings momentum behind it.

"If the ISEQ reaches our end-year target of 7,500, it will leave the market trading on a forward price/earnings ratio of 12.8 times at that point. That seems eminently achievable to us," Davy's head of equity research, Mr Robbie Kelleher, said.

The broker is forecasting double-digit earnings growth across all sectors, apart from food stocks. It believes the banks will deliver earnings growth of 10.8 per cent this year, followed by 10.9 per cent next year, while non-financials will see earnings growth of 12.6 per cent and 12.2 per cent in 2005 and 2006 respectively.