Amidst a generally positive earnings season for the S&P 500, certain companies have raised red flags due to steep declines in analyst earnings estimates. CNBC Pro’s analysis reveals that more than three-fourths of companies that have reported thus far have surpassed Wall Street’s expectations. However, investors must remain vigilant as higher interest rates continue to impact corporate profits and consumer spending. To identify potential disappointments, CNBC Pro examined S&P 500 companies reporting next week that have witnessed substantial reductions in the average analyst earnings estimate over the past three months. NRG Energy stands out as a notable example. The energy provider has faced severe cuts to its average earnings per share estimates, dropping by approximately 50% from three months ago. This is particularly concerning considering NRG’s strong performance in recent times, with a 40% gain year-to-date. Notably, its average price target has surged nearly 75% over the past six months. The stock’s proximity to the analysts’ 12-month price target suggests that this may not be an opportune time for further investment. The average analyst rating for NRG is ‘hold’, as per FactSet. Match Group is another company to watch, with its average analyst earnings per share estimate declining by more than 16% over the past three months. Unlike NRG, the parent company of Tinder and Hinge has seen a significant decline in its stock price, falling over 13% in 2023. Despite this underperformance, the average analyst price target still implies a potential upside of around 40%, highlighting the extent of its recent decline.
Beware of Earnings Surprises: 10 Stocks with Significantly Lowered Estimates
