Apr. 3 at 1:31 PM
Morgan Stanley highlights a new set of U.S. and European stocks with the highest earnings surprise potential ahead of the upcoming reporting season, using a quantitative framework that blends analyst ratings with forward-looking signals.
The model combines Earnings Revision Breadth, Earnings Quality, and overall forecast dynamics into an “Earnings Surprise Composite,” designed to identify companies most likely to beat expectations. The strategy has shown strong performance, delivering pre-cost Sharpe ratios of 1.06 (U.S.) and 0.92 (Europe) since 2024, and ~0.7 over a longer-term backtest.
Top U.S. picks include Western Digital, Citigroup, and RTX, with additional names such as Apple, eBay, ConocoPhillips, and Roblox also ranking highly.
In Europe, ArcelorMittal leads, followed by Barclays, ASML, Nokia, Santander, ASM International, and UPM-Kymmene, all rated overweight.
$RTX $AAPL $EBAY $RBLX $NOK