Investors should keep an eye on companies that may disappoint in earnings and see their stock prices fall. Wall Street has lowered its third-quarter growth forecast for the current month. According to recent FactSet records, companies in the S&P 500 are projected to increase their earnings by 4.2% compared to the same quarter last year, down from the 7.8% expected as of June 30. third quarter growth estimates tend to be lower than in previous months. Nearly 10% of S&P 500 companies have reported results, with more than 79% beating earnings estimates, according to FactSet. However, some names can still disappoint. To find out who can, CNBC Pro presents a FactSet for stocks in the S&P 500 that report next week. These names have seen earnings estimates drop by at least 10% over the past three and six months. Investor sentiment in Valero Energy has taken a significant dive ahead of the quarterly results due on October 24. Analyst estimates for earnings per share have been cut 80.3% over the past three months and 85% over the past six months. However, the stock is favored by 60% of Wall Street analysts. One is Morgan Stanley analyst Joe Laetsch, who has an overweight rating and a $165 price target on Valero. That represents 22.5% upside potential for the stock, which has gained about 4% this year. “We see VLO as well-positioned in the current tight refining environment with greater downstream exposure than peers,” Laetsch said in a Tuesday note. “The asset base is well managed, and we think VLO will continue to execute, driving substantial (free cash flow) as the refining cycle progresses.” Enphase Energy is also making a screener, as analysts surveyed by FactSet have cut their earnings-per-share estimates on the stock by nearly 39% and 35.5% over the past three and six months, respectively. Only half of the analysts gave the stock a buy rating. RBC Capital Markets analyst Christopher Dendrinos recently downgraded the stock’s outlook, downgrading Enphase to sector perform from outperform on Friday. He also lowered his price target from $25 to $100, which suggests the beaten-down stock could gain 8.6%. Dendrinos’ new outlook on the name reflects concerns that Enphase will see slower growth next year amid sluggish demand in the residential solar market. The continued adoption of third-party ownership, or TPO, systems in the US can also weigh on the growth of Enphase’s demand, which, he said, as the company has less market share in TPO systems compared to its competitors. With the TPO model, the installer maintains ownership of the energy system while the homeowner makes monthly payments for panels or electricity, according to Enphase. Shares of the company, which will report on October 22, are down 30% year to date. Tesla is set to report earnings on October 23 after the market closes. The company has a high bar to clear before the stock can see a big jump, as the struggling electric vehicle maker disappointed in third-quarter deliveries and failed to impress investors with the robotaxi it launched earlier this month. Analysts have cut their earnings per share estimates at Tesla by 24.1% over the past three months and 30.8% over the past six months. Overall, 34.5% of analysts rated the car a buy. Wells Fargo was on the bearish side of Tesla heading into earnings, as it reiterated its underweight rating on Friday and said it expects the company to miss third-quarter estimates.
Analysts have cut their earnings estimates in the stock’s report next week
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