Morgan Stanley predicts a surge in stock performance for various companies, including Cloudflare and Walt Disney, following their fourth-quarter earnings reports. The bank anticipates a significant shift in earnings estimates for 2025 based on these results, highlighting a portfolio of stocks for short-term investment opportunities.
Morgan Stanley anticipates positive performance for several stocks, including Cloudflare and Walt Disney , following their upcoming fourth-quarter earnings reports . The Wall Street bank predicts a significant shift in earnings estimates for the remainder of 2025 based on these quarterly results. 'We believe dollar strength will lead to higher performance dispersion across the market this earnings season,' analysts led by Michelle Weaver wrote in a note to clients Wednesday.
'High dispersion typically fosters a robust stock-picking environment.'\Consensus estimates for the fourth quarter of the S&P 500 project earnings per share to increase by 11% year-over-year, with sales growth at 3%. While earnings forecasts remain largely unchanged since the third-quarter results were released in October, sales projections have been revised downward, exceeding the historical average. Against this backdrop, Morgan Stanley has identified a portfolio of stocks that it recommends for the short term, expecting them to surge after the release of fourth-quarter earnings. \Among these companies are Walt Disney, slated to report earnings on February 5th. Morgan Stanley maintains an optimistic outlook on Disney, designating it as a top pick for 2025. The bank rates the stock as overweight and anticipates substantial streaming profits in the future. Disney is also expected to benefit from another year of robust advertising growth in the United States. Morgan Stanley analyst Benjamin Swinburne stated in a December 18th note, 'Between streaming and advertising, 'he beneficiaries and victims of these trends are quite clear today and tend to align with the 'winner-take-most' scale benefits of Internet businesses throughout the value chain.' We see as having the greatest potential to join this group as a content distribution leader – while at the same time benefiting from consumer demand and related growth at its experiential assets.' Disney's share price has remained relatively stable in January, but has experienced a remarkable surge of nearly 22% over the past six months. \Another company poised for potential gains after reporting earnings next month is Cloudflare. This cloud services provider has witnessed its shares climb over 40% in the past three months, reaching a new 52-week high on Thursday. The stock has already seen an AI-driven rally of more than 15% in the first three weeks of the new year, through Thursday. Cloudflare is scheduled to report earnings on February 6th. While the San Francisco-based company forecast in early November that fourth-quarter revenue would fall below consensus analyst estimates due to heightened competition in the cybersecurity market, Morgan Stanley asserts that its fourth-quarter check of resellers 'suggests a strong finish to 2024,' and that 2025 estimates 'are mostly achievable.' Wells Fargo also shares a bullish perspective on Cloudflare, naming it a top pick for 2025 in a January 7th note and forecasting that the $45 billion market-cap company will outperform revenue expectations throughout 2025. \Morgan Stanley also identifies Vertex Pharmaceuticals, Zebra Technologies, and Axon Enterprise (a taser maker and weapons manufacturer) as potential beneficiaries of their latest quarter earnings. Axon was the S&P 500's fifth-best performer in 2024, returning approximately 130%
Technology Markets Morgan Stanley Earnings Reports Cloudflare Walt Disney Stock Performance 2025 Earnings Estimates S&P 500 Dollar Strength Cybersecurity Market AI Streaming Profits Advertising Growth Top Picks
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