BofA Says Macro Barometers Point to Earnings Misses

In a note to investors Tuesday, BofA analyst Savita Subramanian, speaking on upcoming earnings in the S&P 500, said all of its macro barometers that tend to lead earnings results point to a miss.

The analyst pointed to falling guidance ratio, ailing corporate sentiment, slowing signs in both consumption and industrial activity, plus negative economic surprises as reasons for the miss expectations.

However, Subramanian stated, "analysts' channel checks in Industrials and Software are healthy, and early reporters have beat EPS by a median of 3% - typically early reporters don't fare as well ahead of a disappointing quarter."

BofA's expectations for the second quarter have "come down 1% versus the average cut of 4% in the last three months, but excluding Energy the cut has been a deeper 5%."

The analyst said weakening guidance will remain the focus, and they believe the second half of 2023 consensus EPS will come down substantially.

Speaking on the tech sector, the analyst argued that "investors who view Tech as defensive, citing stable earnings during the past two recessions, may be disappointed in the next one."

By Sam Boughedda

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