Morgan Stanley Analysis
The strategy team once again highlights that this has been one of the best earnings seasons in years. Analysing the reaction of Morgan Stanley Research analysts to the published figures, there is a clear bias towards beats; on balance, 48% of reactions point to positive surprises (compared with 26% in Q1).
The picture is similar if we focus on the impact our analysts expect the figures to have on consensus earnings estimates over the next 12 months, with a net bias of 23% (compared with 6% in the previous earnings season).
The strength has been widespread, with Semiconductors, Food & Beverages, Diversified Financials and Aerospace leading the way in both positive surprises and guidance upgrades, although the aggregate bias remains positive across most sectors. As a result of these results, the consensus has been adjusting its earnings growth expectations for this year in Europe, and EPS growth of 17.8% is now expected for 2026 (excluding Energy: 14%). By sector, Semiconductors, Banks and Aerospace are leading the way in the magnitude of earnings revisions.
Although Europe continues to lag behind the United States on most of these metrics, the difference is marginal in some cases, such as the magnitude of earnings revisions.
