Q1'24 Inside The Buy-Side® Earnings Primer®

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Corbin Advisors Releases Q1’23 Inside The Buy-Side® Earnings Primer®

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Corbin Advisors Releases
Q1’23 Inside The Buy-Side®
Earnings Primer®

Survey Finds Notable Disconnect between Investor Sentiment and Management Tone with Investors More Bearish and Bracing for Impact

  • 85% note 2023 company guides were In Line to Stronger Than expected
  • 55% expect Worsening sequential earnings and margin performance, while demand, particularly in 2H’23, is identified as a top three concern (unaided) by nearly one-third
  • 52% of investors and analysts describe themselves as Neutral to Bearish or Bearish, up from 44% last quarter and more than double the percentage of perceived executive bears
  • 43% describe executive tone as Neutral to Bullish or Bullish, up meaningfully from 28% QoQ
  • 88% anticipate 2023 will be a recessionary year, up from 80% QoQ
  • Another cautionary sign, investors remain focused on buttressing balance sheets with 65% continuing to cite debt reduction as the top use of cash, a survey record
  • REITs see the largest level of bearish sentiment in survey history

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FARMINGTON, CT – April 13, 2023 – 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 54th issue of Inside The Buy-side®, was conducted from March 7 to April 4, 2023, and is based on responses from 82 institutional investors and sell side analysts globally, representing ~$5.6 trillion in equity assets under management.

Following last quarter’s survey which found continued broad-based expectations for decelerating performance and global economic weakness but less draconian views first identified in Q3’22, this quarter’s survey finds investor sentiment trending more bearish.

Rebecca Corbin, Founder and CEO of Corbin Advisors, commented, “After a sense of psychological security was established last quarter, when management caution finally caught up with investor angst and validated over a year of growing fears, and companies established 2023 guides that were generally described as in line to better than expectations, the advent of SVB’s demise and ripple effect has shaken the Street’s confidence. At a time when over half of surveyed investors and analysts now characterize their sentiment as bearish and commensurately describe executive tone as more optimistic, the table is set for a bumpy reporting period. Beyond the quarter, a higher number anticipate a recession this year with less conviction identified that it will be a shallow and short contraction. As such, the majority encourage companies to reduce debt at record survey levels and the burdened consumer is now a greater concern. A bright spot, reinvestment remains in focus with nearly half supporting current growth capex levels, and while companies continue to announce layoffs amid slowing demand, few signs point to a pullback in investing for future growth. Notably, M&A remains out of favor at this time. Leading topics for earnings calls center on margin performance, which is expected to be challenged, updates on inflation, and liquidity and funding, a new focus this quarter.

While 85% report full year 2023 guides were In Line to Stronger Than expected, 55% anticipate Worsening sequential earnings and margins, while demand, particularly in 2H’23, is identified as a top three concern (unaided) by 29% of investors, up from 12% QoQ. Furthermore, 88% are bracing for a recession, up from 80%.

Topping concerns for the second consecutive quarter is monetary policy/interest rates (unaided) at 47%. On the heels of a year of U.S. Fed rate increases, more than 50% expect consumer confidence and unemployment to Worsen over the next six months, with the recent SVB-led banking crisis compounding investor angst. Another sign of recessionary caution, 65% point to debt reduction as a top use of cash, a survey record, and layoff mentions in public transcripts increased 49% QoQ.

Malcolm Polley, CFA President and Chief Investment Officer commented, “I expect Q1’23 earnings will be worse than last quarter. Margins are going to come down in large part due to people problems.

The majority, 58% report taking a wait-and-see approach and are Holding equities at this time, though none report Selling, a notable survey first. Continuing, 38% continue to favor reinvestment with 49% encouraging companies to Maintain growth capex at this time, an increase from 29% QoQ.

Sectors that experienced broad-based selloffs in 2022, including Tech and Biotech, see the highest levels of bulls this survey while Industrials garner the most significant increase in support in part due to recent favorable congressional actions. Conversely, Financials and REITs amass the most bearish sentiment, the latter of which faces a new survey low in negative sentiment.

About Corbin Advisors

Since 2007, Corbin Advisors has tracked investor sentiment on a quarterly basis. Access Inside The Buy-Side® and other research on real-time investor sentiment, IR best practices and case studies at corbinadvisors.com.

Corbin is a strategic consultancy accelerating value realization globally. We engage deeply with our clients to assess, architect, activate, and accelerate value realization, delivering research-based insights and execution excellence through a cultivated and caring team of experts with deep sector and situational experience, a best practice approach, and an outperformance mindset.

Inside The Buy-Side®, our industry-leading research publication, is covered by news affiliates globally and regularly featured on CNBC.

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