Goldman Sachs Recommends its Top 25 Tactical Trades for Earnings Season

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By Sam Boughedda 

In a note to investors on Wednesday, Goldman Sachs analysts said the firm recommends buying calls on select stocks where they expect upward revisions to consensus estimates.

"Earnings revision stories outperformed last quarter despite a volatile macro environment; we expect fundamentals to drive stocks again this quarter. Single stock positioning is the lowest in years as evidenced by lower single stock options volumes, higher put-call skew and net selling from Retail investors. In contrast, crowding in index calls has created a headwind for broad equity performance over the next couple weeks," wrote the analysts. "We leverage our equity analysts' fresh estimates and qualitative comments to identify the 25 most out-of-consensus opportunities from our Americas coverage."

Goldman Sachs sees potential for upward earnings revisions driving upside in 17 names, including KBR (NYSE:KBR), Meta Platforms (NASDAQ:META), Maravai LifeSciences (NASDAQ:MRVI), Payoneer Global (NASDAQ:PAYO), Post Holdings (NYSE:POST), Raymond James Financial (NYSE:RJF), and Snowflake (NYSE:SNOW), while it expects downward earnings revisions to cause downside in eight companies, including Franklin Resources (NYSE:BEN), Cinemark Holdings (NYSE:CNK), and Intel Corporation (NASDAQ:INTC).

"Retail investors continue to dominate markets, but have moved from buying single stock calls to buying index calls. Index upside is crowded, we prefer buying less crowded single stock calls to position for selective relief rallies," added the analysts.

However, he acknowledged that 29% of the S&P 500 has preannounced over the past two quarters, "underscoring how difficult it has been for corporates to predict earnings in the rapidly changing macro environment."