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What are our analysts' stock market predictions for US earnings season?

Discover our analysts’ top stocks to watch for the upcoming US earnings season, which starts in mid-July 2020.

US earnings season Source: Bloomberg

Walmart could tick all the right boxes – Jeremy Naylor

There are three reasons that retail giant Walmart is of interest, especially at the moment when earnings season will be driven by Covid-19. Firstly, it provides the essential service of distributing food. It's also become a dominant player online, and evidence shows that this last quarter has been one of the biggest periods of online shopping growth ever. And finally, Walmart is investing in its technology, putting it in better stead to face the future.

Although Walmart has faced criticism over environmental issues and helping to eradicate local shops, it seems it has the chance to dominate for some time to come.

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Tesla remains controversial but short sellers decline – Monte Safieddine

The electric car company's share price has experienced a heavy amount of volatility, which isn’t expected to subside given its upcoming earnings release. Tesla shares recently hit a record high, topping $1000. This significantly hurt those holding short positions, which would’ve closed out with considerable losses.

The two-fold nature of Tesla makes it particularly interesting this earnings season. Is it a car company, at a time when transportation demand is lower thanks to the coronavirus? Or is it a tech company, at a time when the sector is outperforming?

When it comes to earnings estimates, recommendations are just as controversial and that means you can expect volatility if the result strays far from expectations.

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Cyclical stock J.P. Morgan’s results could go either way – Josh Mahony

Second quarter (Q2) earnings season kicks off, unofficially, on 14 July with J.P. Morgan releasing its latest figures. Banks are very cyclical so when there’s the potential for economic weakness you might presume that the retail side of the business is going to suffer.

However, the benefits of investing in an investment bank is that the trading side of the business can help keep the company healthy.

The stock market has seemingly only gone up since the lows that we saw in March, which could prove positive for J.P. Morgan’s outlook. So now, the big question marks are over how weak its retail business is and whether its investment banking side will outperform.

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Hertz earnings could pull back the curtain on its share price – Kyle Rodda

This US earnings season will very much be focused on tech stocks such as Amazon. They've outperformed over the last three or four months since the Covid-19 crisis kicked off and it will be fascinating to see whether that price action can translate into strong earnings growth.

Another stock of particular interest would have to be Hertz, which has really been able to encapsulate the irrational exuberance in the stock market – driven by financial liquidity and the interventions of the US Federal Reserve (Fed). Perhaps some poor earnings could knock the confidence of some of those traders that have gone very long and very big on that company.

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Apple rally could be hit by consumer spending decline – Chris Beauchamp

It seems incredible to note that Apple stock is back trading at all-time highs as we head towards its Q2 earnings report. The stock has shrugged off the volatility from March and April, as the world responded to the Covid-19 crisis. And it looks as if we'll see further improvement in its outlook as Apple moves on from the widespread closure of its shops.

However, there could be clouds on the horizon as consumer spending remains muted amid lockdown. This could hit demand for Apple's premium products in the second half of the year.

As with many earnings this time around, the outlook will be key. We look for Apple to report a fairly good set of numbers and hopefully give an optimistic outlook to keep the stock rallying.

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Zoom could be the earnings outperformer – Victoria Scholar

Analysts have sharply downgraded their earnings outlook in the fallout from the global pandemic with full-year 2020 estimates down by about 25% year-on-year (YoY). The total S&P 500 earnings are expected to drop by just over 44% in Q2 with revenues down by nearly 11%. The energy, auto, transportation and consumer discretionary sectors appear to be those most at risk.

However, one stock that could outperform is Zoom Video Communications, which has seen a massive surge in demand as working from home rises. There's been a wave of earnings upgrades on the stock both for Q2 and the full year. But the real question is, as normality is restored and more people head back to the office, can the stock maintain its momentum?

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Open an account today to get ready for earnings season. Plus, you can keep up to date with earnings announcements on the move, by simply downloading the IG trading app and turning on your notifications.

The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer.

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