Editor's Note: Morgan Stanley analysts said that US stock Q3 financial report season may shape the long and short struggle between US stocks; around the investment topic of the financial report season, the bank has selected some stocks that may have fluctuated significantly due to the recent catalyst , and gave a bullish/bearish direction. Click for details
Editor: Jling
The highly anticipated US stock Q3 financial report season is in progress. Goldman Sachs, Jacks and Johnson disclosed financial reports on Tuesday better than market expectations. Previously, the financial reports released by Bank of New York Mellon and Bank of America also exceeded market expectations.
Before that, the market lowered its expectations for the overall performance of the US stock market Q3 financial report quarter. Michelle Weaver of Morgan Stanley pointed out that the overall expectation of the financial report of S&P 500 components fell 8% from its April peak; expectations, excluding energy, fell 11%.
Weaver said that this financial report season is particularly important because it may shape a long-shoulder dispute; a sharp drop in earnings forecasts may indicate a sharp decline in earnings and a possible profit recession, but on the other hand, the more resilient Q3 financial report season data and stable performance guidance may imply that the correction of earnings is mild, or at least postpone the profit-related debate until January next year, the Q4 financial report season.
Based on this background, Morgan Stanley analysts have screened out several stocks that may have experienced significant fluctuations due to recent catalysts and gave bullish or bearish directions. is as follows:
Morgan Stanley analysts are bullish stocks :
(ARQT), (CMI), (PTEN)
1, Arcutis Biotherapeutics (ARQT)
Source: Huasheng Securities
Morgan Stanley analyst Vikram Purohit believes that if the biotech company's two phase two studies on its drug Zoryve are successful, its stock price will have room for upward. This drug has been used to treat psoriasis and is now being evaluated for atopic dermatitis. The results are expected to be announced by the end of the year.
analysts also said, "We expect investors to pay great attention to these data sets. Our statistical analysis shows that the probability of success of these two trials is very high."
2, Cummins (CMI)
Source: Huasheng Securities
Morgan Stanley analyst Dillon Cumming said Cummins’ Q3 earnings were the focus, with analysts expecting accelerated price/cost growth and supply chain normalization, as well as support for Class 8 engine output and orders, to drive the company’s Q3 earnings growth. Analysts said this should in turn translate into an increase in the company's earnings per share expectations in 2023.
3, Patterson-UTI Energy (PTEN)
Source: Huasheng Securities
Morgan Stanley analyst Connor Lynagh said he expects Cummins' third-quarter performance to be consistent with its fourth-quarter performance guidance. However, he believes that the company's EBITA and free cash flow correction potential in 2023 is higher than that of its peers.
Lynagh also expects comments on pricing and activity trends in drilling and fracking markets to be more optimistic than expected. “In addition, we can see early signs of the company’s capital allocation framework for 2023, including the possibility of increasing shareholder returns, which, in our opinion, will be welcomed by the market.”
Morgan Stanley analysts bearish stocks:
(LOGI), (MU)
1, Logic (LOGI)
Source: Huasheng Securities
Morgan Stanley analyst Erik Woodring expects Logitech to be one of the stocks that could fall due to negative financial reports. The company downgraded its revenue growth forecast for fiscal 2023 last year, but analysts believe the company did not take into account the continued deterioration in consumer PC demand over the past 90 days.
Analysts said they believe the December quarter/2023 forecast needs further downgrade, and the current model is that the December quarter revenue in the quarter was 8% lower than the market consensus estimate. Analysts also expect revenue growth in the fiscal year to fall by 10% year-on-year.
2, Micro Technology (MU)
Source: Huasheng Securities
Morgan Stanley analyst Joe Moore believes that semiconductor company Micron Technology may suffer a shock as investors underestimate the severity of the decline in sales of memory chips .
After the U.S. stock market on September 29, US memory chip company Micron announced its fourth quarter results for the 2022 fiscal year ended September 1, with revenue falling 19.71% year-on-year to US$6.643 billion. The lowest revenue since the second quarter of fiscal 2021; net profit fell 45.15% year-on-year to US$1.492 billion.
Moore expects reports from its customers and competitors to show inventory accumulation.
