BofA warns ‘guidance could be ugly’ as companies report on ‘make-or-break quarter’

Buyers are turning their focus this week on a “make-or-break quarter” for firm earnings, in accordance with BofA International Analysis.

As corporations kick off reporting of their third-quarter outcomes, traders might be looking out for indicators of supply-chain issues doubtlessly consuming away at revenue margins, BofA analysts stated in a analysis report Tuesday. They stated that “earnings misses are extraordinarily uncommon” and the principle focus might be on steering from corporations.

“Steering could possibly be ugly,” the analysts warned. “We imagine 2022 EPS might be revised decrease.”

BofA International Analysis report dated Oct. 12.

Provide-chain issues are getting worse, “but analysts expect margins to hit a brand new peak” in 2022, in accordance with the BofA report. Revenue warnings have already begun.

“A number of corporations have not too long ago issued destructive pre-announcements, principally concentrated in client, supplies and industrials, amid the supply-chain points,” the BofA analysts stated.

The BofA strategists have lowered their S&P 500 earnings-per-share, or EPS, forecast for the third quarter by $2 to $49, in accordance with their observe. “We count on earnings to come back in step with consensus,” they stated of the third quarter.

The S&P 500 index

closed decrease Tuesday, falling for a third straight day as traders await corporations’ earnings outcomes and steering. 

“Provide chain is within the limelight, however wages, China points and hovering commodity costs additionally pose dangers to earnings,” the BofA analysts stated of their report.

Learn: The 2021 stock-market highs are ‘almost certainly’ in, unless earnings clear this bar | BofA warns ‘steering could possibly be ugly’ as corporations report on ‘make-or-break quarter’


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