Morgan Stanley analysts are setting a bullish tone for the upcoming earnings season, with specific companies expected to outperform. Investors should watch Amazon (NASDAQ), Apple (NASDAQ), and Eli Lilly (NYSE) closely, as these companies are anticipated to deliver strong results.
Amazon is highlighted with a “Positive” near-term view. Morgan Stanley expects Amazon to deliver a significant EBIT beat in Q2 and guide positively for Q3. Analysts are 17% above Street EBIT for Q2 and 10% above for Q3, driven by North American retail profitability and accelerating growth in Amazon Web Services (AWS).
Apple also holds a “Positive” near-term outlook. Morgan Stanley sees a favourable setup for the first time in over a year, expecting Apple to post better-than-expected results. Analysts forecast Apple will achieve $96.9 billion in revenue for the September quarter, 4% above consensus, driven by strong iPhone builds, improvements in the Mac outlook, and robust growth in Services.
Eli Lilly is another key player with a positive outlook. Morgan Stanley anticipates that upcoming data from the Phase 3 SUMMIT trial of Tirzepatide/Zepbound in patients with obesity and heart failure will be a catalyst for the stock. Positive data could broaden Medicare coverage and strengthen Tirzepatide’s competitive profile, potentially moving LLY shares up 2-3%.
Overall, Morgan Stanley’s analysts are keen to see how companies manage margins in a challenging pricing environment and whether high expectations for the second half of 2024 will hold. Earnings revisions for the S&P 500 have been less negative than average, suggesting cautious optimism for the broader market.
