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The investment bank notes that European earnings have been revised down during the first quarter, with consensus EPS for 2024 down 3% year-to-date. However, they have found that sales momentum has trended upwards while margins were revised down.
“We continue to expect earnings to be driven by the top line rather than any margin expansion,” said the bank. “We enter the earnings season on a positive note.”
“With lower earnings expectations, we think the bar to beat expectations is not too high and that the improvement in the cyclical backdrop should provide room for positive commentary from companies and potentially feed through to upgrades to 2024 guidance,” added Goldman.
The bank feels cyclical areas of the market will continue to do well, while overall, they see a broader positive earnings surprise.
When it comes to sectors, Goldman sees a surprise potentially coming from energy.
