The good news? Analysts are hiking earnings estimates left and right. The bad news? That’s setting the bar VERY high as we get ready to kick off the second quarter reporting season!
Check out the MoneyShow Chart of the Day. It shows how – and by how much – analysts adjusted their earnings estimates for S&P 500 Index (^SPX) companies during each quarter going back a half decade. You can see that analysts boosted their profit targets by 3.4% for this year's second quarter, the most since Q2 2021!
Source: FactSet
This isn’t “normal.” FactSet research shows that analysts usually cut estimates during each quarter – by an average of 2.7% over the past decade. If there’s one thing Wall Street likes, it’s the “under promise but over deliver” dynamic heading into earnings season. But we don’t have that today.
All in all, six of the 11 S&P sectors enjoyed target hikes during the three-month period. Energy led the way because of the Middle East war’s impact on oil and gas prices. Information technology and materials came in second and third place. On the flip side, health care suffered the biggest estimate cuts.
We’re just a few days away from a flood of Q2 reports. With expectations high, bulls better hope the early reporters deliver – or they could be in for a LONG earnings season!
