US 1Q11 Reporting Season Wrap – Recovery still exceeding expectations.:Macquarie Research

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


US 1Q11 Reporting Season Wrap –
Recovery still exceeding expectations
Event
 We update our outlook for US equity market following the completion of 1Q11
US reporting season and analyse profit results and key trends for the market.
Impact
 1Q11 underlying profits were delivered +6.8% ahead of pre reporting
season expectations. This strong earnings performance has driven
CY11 forecast profits 2.3% higher, and as a result, the consensus CY11
EPSg forecast has been upgraded 2.6ppts to now stand at +15.1%. This
stronger earnings momentum is reflected in the CY11 earnings revision
ratio (1.9x) with all major industries seeing net upgrades.
 Of the 421 S&P 500 companies to report March quarter results, 201 exceeded
consensus EPS expectations by >+5%, while only 62 disappointed by >-5%.
Outlook
 The 1Q11 profit results again exceeded market expectations, suggesting the
US recovery continues to build. Notably, the gap between the earnings
forecast and those delivered widened again in 1Q11 (+6.8%), contrasting the
narrowing over each quarter in CY10 (+14.6% in 1Q10 to +3.4% in 4Q10).
 Standout sectors delivering a positive earnings and revenue surprise in 1Q11
include IT, Healthcare, Energy, Auto, Industrials, Materials, REITs and
Mining sectors. Key stocks beating expectations from these sectors include:
 Exxon, Apple, Intel, GE, Ford, Caterpillar, Merck, Chevron,
Unitedhealth, Johnson & Johnson, Freeport McMoran.
 Most notable for downgrades (although still a net upgrade) was Financials,
with Morgan Stanley, BoA, and Goldman Sachs seeing the most significant
downgrades. Key tech stock Amazon was also a notable downgrade..
Upgrades to CY11 seen throughout 1Q11 reporting season – Earnings
revisions close to 2x – indicate broad upgrade momentum