Morgan Stanley's picks to surprise on earnings rest of the reporting season

CNBC

12 hours ago

Snowflake and Pinterest are among a handful of companies set to surprise Wall Street when they report earnings, according to Morgan Stanley. Earnings momentum is strong. Nearly three quarters of S & P 500 companies have reported results so far, with about 82% of the names posting beats on earnings estimates, according to FactSet With several big-name reports slated for the month ahead, Morgan Stanley analyst Ronald Ho highlighted more than two dozen companies reporting between Aug. 5 and Sept. 2 that could boast strong earnings results. The stocks he mentioned are each rated overweight by Morgan Stanley analysts and fall within the top two quintiles of the firm's "Earnings Surprise Composite" scores, which consider a stock's earnings forecast, earnings quality and other factors. "In anticipation of the upcoming earnings reports from US and European companies, we highlight stocks with the highest and lowest Earnings Surprise Composite scores," Ho said in a Tuesday note to clients. "Furthermore, we integrate our fundamental analysts' stock ratings to adopt a 'quantamental' approach." Take a look at a selection of the firm's picks below: Of Morgan Stanley's screen, Snowflake came out as the name most likely to post an earnings surprise with a 0.97 composite score. The data cloud company, which will report quarterly results Aug. 27 , has seen shares jump 33% this year. The stock hit a new 52-week high last week Snowflake has seen customer growth driven by its artificial intelligence services integrated into its cloud-based data analytics platform. The company in its fiscal first quarter recorded more than $1 billion in sales for the first time. SNOW 1Y mountain Snowflake performance over the past year. Networking giant Cisco Systems is also likely to post an earnings surprise, according to Morgan Stanley. Analyst Meta Marshall remains overweight on the stock and maintained a price target of $70 ahead of results due Aug. 13 . That suggests 3.7% potential upside from Tuesday's close. Shares are up 14% year to date. "We expect upside to FQ4 results given strong spending data points, particularly as enterprises continue to modernize their infrastructure for AI," Marshall wrote in a Aug. 5 note. "While CSCO valuation has already re-rated, gap is currently 5.2x vs. historical 4.6x average, meaning there is still room for further expansion if AI data points or growth outlook surprise to the upside." Pinterest also joined the list. Shares have rallied about 34% this year, and the company is slated to report on Thursday . The image-sharing platform received an upgrade from Morgan Stanley to overweight from equal weight last month. "We have been monitoring PINS's GPU [graphic processing unit] enabled investments and budding engagement and monetization improvements for multiple quarters," analyst Brian Nowak wrote in the July note. "Heading into 2H, we are turning positive as we think the benefits of these investments are set to drive under-appreciated acceleration and earnings power." Other stocks that turned up on Morgan Stanley's list include ConocoPhillips and retailers Walmart and TJX Companies .