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Sell-Side Views Ahead of Q1 Earnings

EQUITIES
  • Ahead of the beginning of the Q1 earnings cycle this week, UBS boost their US tech and real estate stocks view to overweight, while cutting their view on US industrials to underweight.
  • On earnings, BofA write that market consensus for S&P 500 EPS has fallen 1% - marking the first downward revision since Q2 2020. Nonetheless, Leading signals suggest a high likelihood of an EPS beat in 1Q. They expect a 4% beat, or $53.50 vs. consensus' $51.54.
  • They add that despite this, Q1 will likely mark a reset in expectations: beyond this quarter, consensus expectations appear too high. Analysts expect record margins in 2Q-4Q, with earnings slated to accelerate into 2023. But history suggests that oil shocks spawn weaker consumption with a 3-4 quarter lag, indicating a 2H slowdown.

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