Earnings Season Is Set to Be a Blockbuster, Investors Aren’t Prepared: DB

First-quarter earnings season is set to kick off next week, and Deutsche Bank says it’ll be a doozy.

The bank is eyeing 19% year-over-year earnings growth — above the Wall Street consensus of 16%, which is already the most bullish level in four years.

In a client note on Thursday, the bank cited a few tailwinds for its uber upbeat outlook:

  • Elevated oil prices will be a boon for energy-sector earnings — to the tune of 10.3% growth in Q1, compared with 2.2% in Q4
  • AI beneficiaries like Nvidia and Micron should see strong earnings growth, as should the broader mega-cap tech stocks. Financial sector earnings should also grow by almost double to 20%
  • A rising ISM manufacturing index that is now indicating economic expansion, and earnings for industrial cyclical stocks will grow from 2.8% in Q4 to 7.9% in Q1
  • A depreciating US dollar, which they think will boost earnings by 4.1 percentage points as foreign buyers have more purchasing power for US goods and services
  • Earnings in the materials sector should keep pace at 30% growth, thanks to rising metals prices

While Deutsche Bank has adopted a rosy view of the coming earnings performance, investors don’t seem convinced yet, it said. On the contrary, they seem worried about underwhelming results, thanks to factors like the war in Iran and the AI scare earlier this year.

“Equity investor positioning meanwhile is significantly underweight and in line with an imminent collapse in earnings growth,” Binky Chadha, the bank’s chief US equity strategist, said in the note. “Positioning is notably low for sectors in the market cross hairs currently, like Financials and Tech, especially Software.”

Historically, earnings growth and investor positioning have been moderately correlated, indicating a rare disconnect between the two.


earnings performance and equity positioning

Deutsche Bank





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