Corbin Advisors Releases Q3’24 Inside The Buy-Side^® Earnings Primer^®

FARMINGTON, CT – October 10, 2024 – Corbin Advisors, a strategic consultancy accelerating value realization globally, today released its quarterly Earnings Primer®, which captures trends in institutional investor sentiment. The survey, which marks the 60^th issue of Inside The Buy-Side^® Earnings Primer®, was conducted from August 21 to September 26, 2024, and is based on responses from 82 institutional investors and sell-side analysts globally, representing ~$1.4 trillion in equity assets under management.

Following last quarter’s survey that found a tempering of bullishness toward more neutral sentiment amid increased demand and growth concerns, the Voice of Investor® captured in this quarter’s survey reveals a notable divergence in stances, with the highest level of bears registered in over a year. Optimists point to interest rate cuts, cooling inflation, and AI while U.S. election uncertainty, geopolitics, a downtrodden consumer, and supply chain disruptions feed bearish views.

Split sentiment is further evidenced by expectations for Q3’24 earning season, with surveyed financial professionals diverging on whether prints will beat or miss consensus. While earnings season KPIs are generally expected to be Stable to Improving QoQ, those anticipating Worsening revenue and EPS see an uptick. With the looming U.S. election adding to near-term jitters, along with escalating geopolitical turmoil and an increasingly beleaguered consumer, this survey sees a notable increase in investors and analysts anticipating downward revisions to annual guides.

Rebecca Corbin, Founder and CEO of Corbin Advisors, commented, “Following Q2 earnings season, which saw a higher-than-expected number of EPS misses and downwardly revised guides, our survey this quarter reveals heightened concerns around growth and earnings with a greater emphasis on margins. Channel checks indicate continued subdued demand in Q3 amid the looming U.S. Election and an increasingly strapped consumer, while AI, infrastructure stimulus, and cooling inflation offer support. While surveyed investors anticipate a choppy Q3 with more bracing for EPS misses and another round of lowered guides, continued election-induced paralysis and recent events, including the short-lived but stymying port strike, devastation caused by Hurricanes Helene and Milton, and Middle East war escalation are likely to factor into Q4 outlooks. Despite the two largest global economies getting a shot in the arm with the U.S. Fed’s 50 bps rate cut and China’s stimulus efforts, there is an increasing level of pessimism as we round out 2024. As investors sift through the increasingly turbulent landscape, focus remains on demand and order rates, expense management, and disinflation trends while interest in corporate downturn playbooks spikes.”

Fewer than one-quarter report current sentiment as Neutral, down from 41% last quarter, while 45% now express Neutral to Bullish or Bullish sentiment, up from 35%, and one-third conversely characterize views as Neutral to Bearish to Bearish, up from 24% and the highest level of outright bears identified in over a year.

Recessionary concerns are at the forefront, with 62% now expecting a U.S. recession, up from 56% in Q2, which follows five consecutive quarters of easing concern. Of those, the majority anticipate the contraction to occur in 2025 with expectations tilted toward the first half. However, 65% see a short-and-shallow downturn as the most likely scenario.

Despite signs of economic deceleration, investors anticipate 2024 U.S. GDP growth above the 2023 level of 2.5%, but continue to prioritize margins over growth for the third consecutive quarter, 54% to 46%.

Along these lines, investors continue to rank Debt Paydown as the top preferred use of cash, holding at roughly 60% for the third straight quarter. Reinvestment remains the second-most preferred use, but sees a precipitous drop in support to 39% from 57% last quarter, well below the 5-year survey high of 76% registered in Q1’21.

The U.S. Presidential Election overtakes geopolitics as the leading concern with nearly 60% expressing More or High Levels of Concern over the potential impact of U.S. trade measures and tariffs.

Regarding broader views on global economies, investors maintain their positive outlook on India, followed by the U.S. and Southeast Asia. Despite China’s recent stimulus efforts, views on its economy over the next 6 months remain downbeat.

Turning to sector sentiment, Healthcare and Technology remain market favorites, though the latter sees its lowest level of bullish sentiment in over a year. Consumer Discretionary displaces REITs as the sector with the most bears, while Staples and Utilities join REITs among those with the largest net improvement in sentiment QoQ.