Morgan Stanley |We have carried out a survey amongst our sectorial analysts to find out their estimates with regard to consensus expectations for each sector. Also to identify where they are most confident in terms of results.
The survey flags a solid Q3, with 50% of sectors beating forecasts vs 13% seen as falling behind. That said, looking ahead at FY’23, my analysts predict a clear downside risk to consensus estimates for 71% of sectors. Banks, insurers and utilities are the only ones where they see upside risks. Worth highlighting that this divergence between Q3 and next year had never been so big.
As far as stock picking goes, here are those in which the analysts have the most conviction ahead of the results:
1. Positive: BBVA, Capgemini, Experian, GSK, Ipsen, ISS, Sodexo y Whitbread.
2. Negative: Eurofins, Idorsia and Yara Internacional.
In the case of BBVA, we expect the bank to beat out in terms of NII (double digit CAGR growth 2021-24), both in Spain and in Mexico (between the two locations they account for 90% of profits). Furthermore, we see upside in the guidance for margins.
BBVA’s balance sheet structure is similar to that of Caixabank (top pick), benefitting from the sensitivity to interest rates, which we hope will already be visible in Q3. With regard to the capital structure, the current 12.45% CET1 vs 12-7% in December is an acceptable level. And we expect this to remain stable, dropping just 3bps QoQ. As a result, with upside in NII and margins, a stable capital situation, and all the risks in Turkey already in the price, we expect a good relative performance from the stock ahead of the results.
