Morgan Stanley thinks third-quarter earnings expectations have “been lowered to the point where we would be quite surprised to not ultimately see aggregate earnings upside for the 27th consecutive quarter.” In a research note Friday, the firm said that with such declines in analyst estimates, actual results “show modest upside.”
Morgan Stanley is forecasting year-over-year earnings to fall 3% for S&P 500 companies (ex-financials) in 2015. Excluding energy companies as well, the firm sees earnings growth of 5.8% in 2015.
By sector, telecom is forecast to grow the most (15.7%), followed by health care (12.5%).
In 2016, Morgan Stanley sees earnings growth rebounding in the materials sector to the tune of 18% and continued growth in consumer discretionary of 14.7%.