Wall Street Report Season: Q1 Earnings Preview and Forecast

2024-04-08 15:32:00

The report season on Wall Street will open this week when the first companies will start reporting their results for the first quarter of 2024. The reports come against the background of the new highs in the markets when the S&P 500 increased by 10.5% during the quarter to a level of 5,200 points and the Nasdaq rose by 9% .

Which companies will report this week?

On Wednesday before trading, Delta Air Lines will report +2.48% Close: 0 Open: 46.39 High: 47.39 Low: 46.3 Cycle:– Page Quote News Graphs Company Profile Recommendations More articles on the topic: When analysts expect revenues of 12.55 billion dollars and earnings per share of 35 cents. Delta did beat analysts’ expectations in the fourth quarter, but it also lowered its forecast for 2024 when it now expects annual earnings per share of between $6-7.

In addition, on Friday before trading, some of the largest financial entities will report, such as JP Morgan JP MORGAN +0.4% Close: 0 Open: 197.68 High: 198.98 Low: 197.64 Turnover:– Page Quote News Graphs Company Profile Recommendations More articles on the subject: , Wells Fargo WELLS FARGO & CO +0.74% Close: 0 Open: 57.43 High: 57.94 Low: 57.31 Cycle:– Page Quote News Graphs Company Profile Recommendations Additional articles on the subject: , City CITIGROUP +0.51% Close: 0 Open: 61.69 High :62.31 Low:61.69 Cycle:– Page Quote News Graphs Company Profile Recommendations More Articles on the subject: Blackrock BLACKROCK INC +1.04% Close:0 Open:802.99 High:807.54 Low:797.65 Cycle:– Page Quote News Graphs Company Profile Recommendations Articles More on the subject:

Will the companies overtake the analysts’ forecasts for the quarter as well?

In the last four quarters, the earnings per share of the S&P 500 companies exceeded analysts’ forecasts by an average of 7.1%, so there is no reason not to think that the companies will beat the expectations this time as well. However, the results are expected to show smaller deviations from the analysts’ expectations compared to the previous quarters as a result of the general slowdown in the American economy.

Chris Snake, Chief Investment Strategist at the Wolf Firm predicts that the S&P 500 companies will overtake analysts’ expectations on the earnings per share side by an average of 4-5%, and he notes that this forecast is especially reasonable mainly due to the fact that the analysts covering the companies lowered their forecasts for the first quarter in 2.5% on average over the past year, which will make it easier for companies to beat forecasts.

However, it is likely that beating analysts’ forecasts alone will not satisfy investors, they will also want to see strong forecasts from the companies that will justify the large pars. Since the low of October the S&P 500 has already risen by 25% and is trading at a forward earnings multiple of 20 compared to a multiple of 16 in October. Strong forecasts will reassure investors and make it clear that the companies’ growth justifies the increases in their shares, but any weak forecast will also lead to lower recommendations from analysts and declines in share prices.

At Goldman Sachs, for example, they are not so optimistic about the markets and leave their target price for the S&P 500 index at 5,200 points, slightly lower than its current level. The company leaves its current forecast due to the fact that in their assessment the Federal Bank’s interest rate path and the path of economic growth are fully priced by the markets. However, the analysts of the investment bank proposed a series of alternative scenarios because in their estimation the forecast was uncertain.

Alongside this, Goldman Sachs provided estimates of where the index may move in a number of other scenarios. In one of them, “achieving” valuations similar to those achieved in 2018, before the Corona epidemic may bring the index to end the year at a level of 5,800 points. The other two scenarios are much more bearish – a situation in which growth estimates prove to be too optimistic, or alternatively a situation in which investors begin to price in the risk of a recession. Each of them may lead to a situation where the S&P 500 ends the year at a level of 4,500 points.

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