Insights on Q3 Earnings Season

Investing.com — Volkswagen (ETR:VOWG), Novartis (SIX:NOVN), and other stocks may surprise investors during the third quarter earnings season, according to UBS analysts.

Key Factors Influencing Performance

The analysts have highlighted several factors that could impact these stocks and their earnings reports.

Volkswagen

Volkswagen is flagged for potential negative surprises due to:
– Weakening European and Chinese markets
– Ongoing challenges in the automotive sector

UBS notes that Volkswagen’s first-half earnings before interest and taxes (EBIT) did not meet the seasonal run rate needed to achieve 2024 expectations. The company might revise its guidance downward, as the first-half EBIT reached only 47% of consensus expectations. The anticipated underperformance reflects broader sector weaknesses, with autos expected to see contracting growth in 2024.

Novartis

Novartis may also disappoint investors this earnings season. While performing well in some segments, the pharmaceutical giant faces downward revisions due to margin pressures. UBS indicates that Novartis has achieved only 39% of the required EBIT for 2024 consensus estimates, suggesting a significant miss unless the company excels in the second half of the year. The healthcare equipment and biotechnology sectors have experienced mixed performance in Europe recently, adding to Novartis’ challenges.

Positive Outlook for IAG

Conversely, International Consolidated Airlines Group (LON:ICAG) is positioned for potential positive surprises. UBS believes IAG may exceed expectations, supported by a robust first-half EBIT performance, which constituted 35% of its annual guidance. The travel and transportation sectors have shown resilience, and IAG’s exposure to recovering consumer demand could enhance its third-quarter results beyond current market expectations.

Conclusion

UBS analysts emphasize that guidance adjustments will significantly influence investor reactions throughout the third quarter earnings season.