JFrog stock rises as Cantor Fitzgerald maintains Overweight rating after strong Q2
Investing.com -- Second-quarter earnings for European companies have come in ahead of expectations, with financials and U.S.-exposed sectors leading the surprise, Bank of America (BofA) analysts said.
"European EPS growth surprises to the upside so far on the back of low expectations," BofA wrote, noting that with one-third of companies reporting, Stoxx 600 earnings per share (EPS) are up 8% year-on-year, well above the 2% growth forecast by consensus.
The upside has been “dominated by financials,” which were expected to have a subdued quarter.
Analysts had lowered EPS estimates by more than 6% since April, setting a “relatively low bar” for Q2 performance, BofA said.
While currency headwinds were a concern, given the 3.5% year-on-year gain in the euro trade-weighted index, the bank said “the start of Q2 reporting helps to ease these concerns,” especially for tech and healthcare, which are “so far contributing to the upside surprise.”
Despite the strong headline EPS figure, breadth is said to remain a concern.
“Only 47% of companies have beat EPS estimates so far, the lowest breadth of EPS surprises in six quarters,” BofA noted, citing foreign exchange effects as a key drag.
EPS beats for cyclicals excluding financials fell to 36%, the lowest since at least 2013.
However, U.S.-exposed stocks are said to have bucked the trend with a 57% EPS beat ratio, “a two-year high,” led by healthcare names, where “beats are running at an eight-year high of 73%.”
“Stocks beating EPS estimates have been rewarded with median 1-day outperformance of 1.4%,” BofA said. They stated it is the best post-earnings performance since Q1 2020.