Morgan Stanley predicted that European firms will beat market expectations for first-quarter earnings, citing the better-than-expected macro figures of the previous couple of months. However the Wall Road financial institution additionally expects weak point as a consequence of a number of elements, equivalent to a slowing economic system, headwinds from a strengthening Euro, and the contraction of revenue margins within the second half of this yr. Strategists on the financial institution warned that these elements might result in downgrades later within the yr, alongside a ten% fall in full-year earnings per share. The funding financial institution additionally discovered that the leisure, retailing, and constructing and development sectors usually tend to beat than miss expectations of their first-quarter earnings reviews. « Higher-than-expected macro newsflow over the previous couple of months means that European firms will present one other stable beat for 1Q outcomes and we doubt firm administration groups will probably be involved sufficient but to information full-year estimates decrease both, » stated Morgan Stanley strategists led by Giorgio Magagnotti in a analysis notice to purchasers on Apr. 3. The desk beneath reveals 5 shares highlighted by Morgan Stanley, the place its analysts have a « excessive conviction » in outcomes. The Wall Road financial institution holds « optimistic views » on French paint maker Saint-Gobain and on one of many world’s largest reinsurers, SCOR . The listing additionally contains pan-European resort operators Whitbread and Accor , together with hotel-servicing agency Elis. The funding financial institution stated Saint-Gobain is not anticipated to beat market expectations when it reviews first-quarter outcomes on Apr. 27 since that interval is often the slowest for the development sector. Nonetheless, the Wall Road financial institution’s analysts assume the main target will probably be on the corporate’s full-year steerage. « We predict Saint-Gobain’s one-stop-shop providing and solutions-driven method will help pricing resiliency in a deflationary vitality value setting, » stated Morgan Stanley analysts, who challenge the corporate’s shares will rally by 48% over the following 12 months to 76 euros ($83). « Q1 is simply a income launch, no earnings, but we expect it should show a optimistic catalyst for shares with the enterprise persevering with to outperform underlying market development. » Morgan Stanley can also be bullish towards London-listed Whitbread forward of its full-year outcomes on Apr. 25. The funding financial institution expects the resort operator to beat market expectations on revenue earlier than tax and money return, additionally anticipating an « upbeat evaluation » from the brand new CEO Dominic Paul. « Whitbread’s asset backing gives inflation hedge, and the shares are buying and selling at its up to date property valuation, leaving the operations without spending a dime, » the analysts wrote. « We predict a money return and see the FY23 outcomes as the primary upcoming catalyst. »
