Goldman Sachs Group Inc. strategists raised their forecasts for Japanese shares to reflect updated assumptions that the yen likely won’t strengthen much in coming months.

With Japan’s economy expected to remain relatively solid, Goldman boosted its predictions for earnings-per-share growth in the Topix index to 12% in the fiscal year started April 1, and 8% and 7% the following two years, strategists Kazunori Tatebe and Bruce Kirk wrote in a report dated Sunday. The impetus for the change is that the dollar will trade at 145 yen during those three years, they said, compared with a previous view that the Japanese currency would appreciate during the period.

“In addition to solid fundamentals relative to overseas markets” in Japan, “two key structural changes, domestic inflation and governance reform, will continue to lift up the market through the end of 2023,” they wrote.

The Goldman strategists’ bullishness toward Japan shares is in line with forecasts from peers that strong earnings will support a rally in stocks in the world’s third-biggest economy. Price targets for the Topix gauge are rising faster than for other global indexes, underscoring analysts’ optimism toward Japanese equities: the target for the Topix as a whole has advanced more than 12% from a mid-January low, exceeding a gain of about 8.5% for the MSCI All Country World Index.

Goldman also lifted its targets for Topix to 2,500 by the end of the year and its 12-month forward view to 2,650. The Japanese benchmark closed at 2,428.38 on Friday, and it’s jumped 28% so far this year. Japanese markets were closed Monday for a national holiday.

Value shares in Japan have been outperforming and that rally will likely continue, the strategists wrote. Companies with low price-to-book valuations such as utilities and steelmakers have beaten firms with high ratios such as tech companies and drug makers, according to the report.

--With assistance from Shikhar Balwani.