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 is another ASX 200 that could surprise thanks to its strong customer deposits growth. Goldman highlights that "JDO 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." 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 Qualitas' shares. It is tipping a strong result from the investment company thanks to "developers and asset owners look to alternative financiers."
Retail
Breville could deliver a stronger than expected half year and full year result in FY 2023. This is due to Goldman's 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 "suggests that trading in 1H23 is likely to offer positive surprise vs. consensus." Goldman has a buy rating and $7.80 price target on the drinks company's 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 the ASX tech stock's business 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 "top line momentum more than offsetting the higher costs." Goldman has a buy rating and $4.60 price target on Telstra's shares.
Travel
Goldman Sachs is feeling positive about Corporate Travel Management's prospects in the first half and full year. As a result, it has put a buy rating and $20.30 price target on this ASX travel stock. Goldman expects "upside surprise in both 1H23 earnings vs. the Street as well as outlook statements."
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 "US airlines' 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."
