Earnings season is underway – and it’s predicted to be a big fall. Market watchers are anticipating lower earnings and softer guidance as the impact of a series of rate hikes holds in place. However, Morgan Stanley’s European strategists believe this season’s results will far exceed expectations – as it is fundamentally out of date – and are favoring some stocks in particular. “We expect the results in Q2 2022 to beat expectations again. However, more difficult [competition]Morgan Stanley strategists, led by Ross MacDonald, said in a note on July 14. “Highly persuasive ideas ‘highly persuasive ideas’ – that analysts say one such stock is Airbus, Morgan Stanley has raised its earnings forecasts to 8% and 4% for fiscal years 2022 and 2023 respectively. that higher input costs, engine supply delays and stiffer competition are unlikely to be major obstacles to Q2 earnings. Morgan Stanley has a share price target of 135 euros (136). .85 USD), to close at around 104 euros on Monday, representing a potential gain of 29.8% French utility Engie also made the bank’s list, with Morgan Stanley predicting earnings The company’s second quarter will be a “positive catalyst” for the stock.Guidelines for 2022 could also be on the cards, with the bank saying the number is 19% higher than the consensus on th u the company’s annual net income. Morgan Stanley has a price target for the stock of 16 euros, giving the stock a 45.5% upside potential from Monday’s closing price of 11 euros. The bank also likes luxury retailer LVMH. It expects the company to deliver “another industry-leading performance”, fueled by solid top performance from the fashion and leather goods divisions, better gross margins, and profit margins. Forex. Morgan Stanley has a share price target of 835 euros, closing at around 614 euros on July 18 – an implied gain of 36%. What’s next for European stocks While the bank remains upbeat about second-quarter earnings, it believes the “backward look” results do not represent what lies ahead. “Unfortunately, the positive message from the Q2 results is largely irrelevant, as it is trending backward. European earnings adjustments have turned negative over the past few weeks and we expect This new downgrade cycle will accelerate in the coming weeks as macro uncertainty prompts analysts to reduce estimates going forward,” MacDonald said. “We believe these downgrades will kick in regardless of whether or not justified by company guidance – analysts will move ahead to lower their forecasts even if the company’s comment still healthy,” he added. Analysts’ consensus earnings are 15% and 3% higher for both 2022 and 2023, respectively, according to Morgan Stanley.
