Q3 earnings downgrades
Oct 11, 2022
The Q3 result season is starting this week with JP Morgan opening the dance this Friday. It looks like the sell-side analysts are finally revising their earnings forecasts downwards in light of the more difficult economic environment, the ‘everywhere’ inflation and the higher financing costs. Excluding energy, earnings forecasts for the Q3 have been downgraded more than 10% since the beginning of the year. The picture should even be bleaker in Europe. Stock markets have already taken this partly into account. However, we believe that it is still too early to change our defensive stance: we continue to prefer undervalued quality businesses with strong balance sheets that are more resilient in an economic downturn.