Earnings season is now underway and companies have started to release their report cards for the last six months.
While there will inevitably be some results that disappoint the market, history shows us that there are plenty that positively surprise.
Goldman Sachs has been busy analysing the month ahead and has named 10 buy rated ASX stocks that it believes could deliver stronger than expected updates.
Which ASX stocks could surprise?
The 10 ASX stocks that Goldman Sachs is tipping to positively surprise are as follows:
- Breville Group Ltd (ASX: BRG)
- Corporate Travel Management Ltd (ASX: CTD)
- Data#3 Limited (ASX: DTL)
- Endeavour Group Ltd (ASX: EDV)
- Judo Capital Holdings Ltd (ASX: JDO)
- Qantas Airways Limited (ASX: QAN)
- QBE Insurance Group Ltd (ASX: QBE)
- Qualitas Ltd (ASX: QAL)
- Telstra Group Ltd (ASX: TLS)
- Temple & Webster Group Ltd (ASX: TPW)
Financials
In respect to QBE, the broker has a buy rating and $16.67 price target on this insurance giant’s shares. Goldman believes that “COR guidance & underlying insurance margins for FY23 likely to surprise to the upside.”
Judo Capital could surprise thanks to its strong customer deposits growth. Goldman highlights that âJDO continues to grow materially above system levels on customer deposits (10x in the month of Nov-22). Overall, this would translate into an additional tailwind to NIM.â The broker has a buy rating and $1.70 price target on the bank’s shares.
Goldman has a buy rating and $3.45 price target on Qualitasâ shares. It is tipping a strong result from the investment company thanks to âdevelopers and asset owners look to alternative financiers.â
Retail
Breville could deliver a stronger than expected half year and full year result in FY 2023. This is due to Goldmanâs belief that “the secular trend of coffee consumption upgrade will continue globally and that BRG will stand to benefit structurally as a leader in this upgrade.” The broker has a buy rating and $23.50 price target on its shares.
Goldman believes the market is being “too negative on near-term revenue” of Temple & Webster. It has a conviction buy rating and $7.60 price target on the online furniture retailer’s shares.
The broker also believes that Endeavour finished the half better than the market was expecting. It feels this âsuggests that trading in 1H23 is likely to offer positive surprise vs. consensus.â Goldman has a buy rating and $7.80 price target on the drinks companyâs shares.
Tech and telco
Goldman expects Data#3 to deliver “continued strong top-line growth from digital transformation projects delayed through COVID.” The broker also expects operating leverage to flow through as it scales. It has a buy rating and $9.20 price target on Data#3 shares.
Telco giant Telstra has been named as a positive surprise candidate. This is due to âtop line momentum more than offsetting the higher costs.â Goldman has a buy rating and $4.60 price target on Telstraâs shares.
Travel
Goldman Sachs is feeling positive about Corporate Travel Managementâs prospects in the first half and full year. As a result, it has put a buy rating and $20.30 price target on its shares. Goldman expects âupside surprise in both 1H23 earnings vs. the Street as well as outlook statements.â
Finally, Qantas, which Goldman has a conviction buy rating and $8.20 price target on, has been tipped to have finished the first half strongly. It notes that âUS airlinesâ 4Q results also reflected strength in pricing in the current environment, with American Airlines, Delta Airlines and United Airlines unit revenue averaging +19% vs. pre-covid level in the quarter.â
The post 10 ASX stocks to buy before they report this earnings season: Goldman appeared first on The Motley Fool Australia.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Judo Capital and Temple & Webster Group. The Motley Fool Australia has positions in and has recommended Telstra Group. The Motley Fool Australia has recommended Corporate Travel Management and Temple & Webster Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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