Early Read from Inside The Buy-Side® Q4’22 Earnings Primer®

Next week, we publish our Inside The Buy-Side® Q4’22 Earnings Primer® report, and with it, a surfeit of interesting data and insights into top earnings call topics, growth capex expectations, expected U.S. GDP growth rates, and views on key economic indicators, to call out just a few areas.

But in the meantime, here’s a sneak peek into our findings:

• While investor sentiment is still downbeat, it’s off the lows we saw last quarter across almost all our channel checks. As a reminder, we identified a meaningful reversal in bullish investor sentiment more than a year ago (Oct 2021), with management tone lagging buy side concern by two quarters. In this quarter’s survey, executive bearishness has now surpassed that of investors.
• 44% of investors are Neutral to Bearish or Bearish, down 12% QoQ, with fewer outright bears seen as well… 18% vs. 27%
• Conversely, 52% describe management tone as downbeat, up from 46% last quarter; of note, this represents the largest bearish differential between executives and investors in survey history, topping Q1’20 / COVID-19 Pandemic levels
• 44% anticipate Worse Than sequential earnings, though nearly one-third expect Better Than last quarter results, more than double QoQ

The market abhors uncertainty, which has rained down upon us in abundance. In January, injections of certainty will commence as companies publish full year 2023 guides, which will no doubt be conservative. At that time, the Street will have the guardrails it needs to move ahead and invest with greater confidence. But first, we may experience one last capitulation as the reality of 2023 sinks in.

The economy has more potential to deflate, which makes expectations management and effective communication some of the most important ingredients in preserving and growing value in 2023. Under promising and over delivering can serve to decouple the market (and a company’s stock) from the macro.