A rocky ride over Summer
Jul 05, 2022
As we enter the Q2 result season, stock prices in Europe have corrected some 20% since their highs reached in December last year. It surprises us however that analyst estimates have not come down: on the contrary they even increased this year despite the numerous headwinds of inflation, higher interest rates, energy disruption, Ukraine and overall worsening economic conditions. Therefore we expect earnings estimates to be revised downwards over the coming months as the corporate reality confronts the analysts hopes. It could well be rocky ride in the stock market over the Summer. We believe the best approach remains to focus on quality companies with low valuations.