The first full week of earnings season begins on July 10, 2023, with expectations for significant stock movements driven by quarterly results. According to a report from Goldman Sachs, a total of 35 companies within the S&P 500 and six in the Dow Jones Industrial Average are set to announce their earnings, including major financial institutions like JPMorgan and Citigroup, both scheduled to report before the market opens on July 11. Other notable companies, such as PepsiCo and Netflix, will share their latest financials on July 13.
The analysts at Goldman Sachs, led by John Marshall, anticipate that investors will reward companies that exceed fundamental expectations this quarter. They noted that current market positioning appears “neither crowded nor fearful,” indicating a more confident investor sentiment compared to previous quarters. The options market suggests average earnings-day stock movements of plus or minus 4.7%, the lowest in two years, significantly down from 7.1% last quarter.
Stock Opportunities Identified by Goldman Sachs
As earnings reports approach, Goldman Sachs conducted a screening for 25 stocks deemed “out-of-consensus,” identifying 19 potential opportunities for upward earnings revisions that could drive individual stock performance. Among those highlighted is Permian Resources, an oil and natural gas company that has seen its stock price increase by over 28% in the last three months, outperforming the S&P 500’s nearly 17% gain during the same period.
Neil Mehta, an energy analyst at Goldman, has rated Permian Resources as a buy, projecting an additional 13% upside. He attributes this potential growth to the company’s ongoing efforts to reduce well costs and optimize its business structure, alongside strategic mergers and acquisitions. Permian Resources is expected to release its earnings on August 6.
Another company poised for potential gains is financial services provider State Street Corp., which has surged approximately 38% over the past three months. Analyst Alexander Blostein considers State Street’s risk-reward profile to be the “most attractive” among trust banks he covers. The company is set to report its second-quarter results on July 11, and Blostein predicts that analysts will raise their estimates following the announcement, driven by improved fee structures and a stable outlook for net interest income.
Growth Predictions for GE HealthCare
GE HealthCare is also expected to exceed earnings expectations due to stability in its end markets. Analyst David Roman has rated GE HealthCare a buy, suggesting that the company’s guidance for 2% growth in the second and third quarters underestimates the robust U.S. imaging market, the recovery pace in China, and the rollout of its new diagnostic drug, Flyrcardo. GE HealthCare’s shares have risen more than 19% in the past three months, and it is set to report its second-quarter financials on July 30.
As earnings season progresses, market participants will closely monitor these reports to gauge the direction of the stock market, with Goldman Sachs’ insights providing valuable context for potential movements. The anticipated responses from investors may set the tone for the upcoming quarter, reflecting broader economic conditions and sector-specific trends.
