These are Morgan Stanley's top picks into quarterly earnings

Published Wed, Apr 17 20241:35 PM EDTUpdated Wed, Apr 17 20241:53 PM EDT

As earnings season picks up steam, Morgan Stanley has named a group of stocks that could see a jump on quarterly results. "We believe the market is watching for a potential 1Q bottom in earnings, moving into a 2Q sequential recovery and ultimately a 2H expansion," wrote equity strategist Michelle Weaver in a Wednesday report. Against that backdrop, analysts at Morgan Stanley provided a list of stocks that could see a near-term catalyst that should spur a meaningful move for each name. The firm's top stock picks heading into quarterly results include e-commerce heavyweight Amazon as well as artificial intelligence play Nvidia, both of which Morgan Stanley thinks have more room to run after a strong start to 2024. Nvidia has climbed more than 70% in 2024, and the chipmaker is set to report quarterly results on May 22. Analysts polled by FactSet forecast earnings per share of $5.56 on revenue of $24.46 billion in the fiscal first quarter. Analyst Joseph Moore thinks the company continued to benefit from robust demand driven by AI throughout the quarter, which he says is reflected in upward revisions to earnings estimates across Wall Street. Analysts have upwardly revised their earnings estimates on Nvidia by 17% over the past three months, according to FactSet data. NVDA YTD mountain Nvidia stock. "We expect a beat to consensus estimates for the April quarter and strong guidance, setting the stage for another series of positive EPS revisions," Moore said. The firm maintains an overweight rating on Nvidia stock as well as a $1,000 per share price target, which implies 14% upside from Tuesday's close. On Amazon , analyst Brian Nowak expects the company to show progress in reducing its "cost to serve," which he says should be the basis for stronger profit and forward guidance. He notes that his first-quarter outlook is 18% above Wall Street's consensus for earnings before interest and taxes, and he expects a profit beat. Amazon has added 19% in 2024, and the company will report quarterly results on April 30. Analysts polled by FactSet forecast earnings of 83 cents per share on revenue of $142.6 billion. AMZN YTD mountain Amazon stock. "We see room for continued cost improvements as AMZN has multiple operational levers to drive North America and Int'l cost to serve per unit lower," Nowak said. The analyst has a $215 per share price target on the stock, which implies 17.2% upside from Tuesday's close, as well as an overweight rating. "In North America, we expect a continued push on improved fulfillment efficiency, shorter shipping distances/times, greater route density, inbound shipping efficiencies, and growing robotics usage and fulfillment center retrofitting to lead to improved productivity, efficiency, and profitability," he added.