Morgans warns that these ASX shares could disappoint in FY23

Investors may expecting too much from these ASX shares in the second half…

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • The second half of FY 2023 is now well underway
  • A few companies had soft starts to the year but maintained their full-year guidance
  • Morgans believes they could ultimately disappoint in FY 2023

With earnings season now behind, it's time to focus on the second half of FY 2023.

And while the next few months are likely to be very successful for many companies, this may not be the case for all.

According to a note out of Morgans, its analysts believe that some ASX shares are expecting too much from the half. So much so, it suspects that they could fall short of guidance and is warning investors to be careful.

Which ASX shares could disappoint in the second half?

Morgans has warned that there are six ASX shares in particular that could be destined to disappoint in FY 2023.

These are energy company AGL Energy Limited (ASX: AGL), packaging giant Amcor (ASX: AMC), health and safety products company Ansell Limited (ASX: ANN), baby products retailer Baby Bunting Group Ltd (ASX: BBN), property listings company Domain Holdings Australia Ltd (ASX: DHG), and telco Superloop Ltd (ASX: SLC).

The broker highlights that with their guidance for the full year maintained after a soft first half, they will need a significant improvement in their performance in the second half. This is something that is far from guaranteed in the current environment. It commented:

Notable companies (DHG, AGL, AMC, BBN, ANN, SLC) missed forecasts in February. Still, they maintained their full-year guidance, setting the scene for potential earnings disappointment if operating conditions don't recover as planned.

Consensus industrial estimates suggest a second half earnings skew (49%:51%) which is curious given the economic backdrop and is at odds with the typical pre-COVID first half skew (56%:44%). More specifically, 49% of companies are expected to be skewed to 2H, well above the 25% in pre-COVID times. So if post-reporting earnings trends hold, small caps could be again vulnerable at the upcoming May 'confession' season.

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 Baby Bunting Group and Superloop. The Motley Fool Australia has positions in and has recommended Amcor Plc. The Motley Fool Australia has recommended Ansell and Baby Bunting Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Broker Notes

A man holding a cup of coffee puts his thumb up and smiles while at laptop.
Broker Notes

Guess which ASX 50 share is a top buy for 2025

Bell Potter has just slapped a buy rating on this stock. Let's see why.

Read more »

a woman holds a facebook like thumbs up sign high above her head. She has a very happy smile on her face.
Broker Notes

Goldman Sachs just put a buy rating on this ASX 200 share

The broker has good things to say about this 'high-quality' company.

Read more »

Three people in a corporate office pour over a tablet, ready to invest.
Broker Notes

Top brokers name 3 ASX shares to buy today

Here's what brokers are recommending as buys this week.

Read more »

A little boy holds his fingers to his head posing as a bull.
Broker Notes

Why this broker is bullish on these ASX 200 stocks

Ord Minnett has good things to say about these shares.

Read more »

a man with a wide, eager smile on his face holds up three fingers.
Broker Notes

3 of the best ASX shares to buy for 2025

Analysts have good things to say about these shares ahead of the new year.

Read more »

Siblings jumping on a trampoline.
Broker Notes

3 ASX small-cap stocks to buy for 2025: brokers

Here are 3 ASX small-cap shares capturing the attention of professional brokers this week.

Read more »

Three miners wearing hard hats and high vis vests take a break on site at a mine as the Fortescue share price drops in FY22
Resources Shares

3 ASX mining shares just upgraded by brokers (one with 60% upside!)

Here are 3 ASX mining shares that brokers are backing for growth in an uncertain climate.

Read more »

A man holding a cup of coffee puts his thumb up and smiles while at laptop.
Broker Notes

Morgans says that these ASX shares are top buys

Let's see what the broker is saying about these shares this week.

Read more »