Q1 earnings buy list: Morgan Stanley picks Nvidia, Amazon and these 10 stocks

Morgan Stanley analysts said Wednesday they believe that the market is poised for a potential bottoming out of earnings in the first quarter, followed by a sequential recovery in the second quarter, and an expansion in the second half of the year.

In this context, the Wall Street giant highlighted 14 stocks that are expected to show significant movements based on first-quarter earnings — with 12 anticipated to move positively and 2 negatively.

The 12 stocks that analysts are bullish on include Nvidia (NASDAQ: NVDA) and Amazon.com (NASDAQ: AMZN), alongside AbbVie Inc (NYSE:ABBV), Corning (NYSE:GLW), Cullen/Frost Bankers (NYSE:CFR), and Devon Energy (NYSE:DVN).

Moreover, the analysts highlighted Lazard (NYSE:LAZ), Lifestance Health Group Inc (NASDAQ:LFST), Paccar (NASDAQ: PCAR), S&P Global Inc (NYSE:SPGI), SBA Communications (NASDAQ: SBAC), and Seagate Technology PLC (NASDAQ:STX).

On the other hand, the two names that are expected to see a negative reaction after Q1 earnings are Highwoods Properties (NYSE: HIW) and Logitech (NASDAQ: LOGI).

Consensus forecasts predict a first-quarter earnings per share (EPS) increase of 2.7% year-over-year for the S&P 500, with sales expected to grow by 3.0%.

However, Q1 earnings estimates have decreased by 2.5% in the past three months. In the weeks leading into this earnings season, the Energy, Materials, and Financial sectors saw positive revisions, while Discretionary, Tech, and Communications experienced declines.

“Looking farther ahead, we believe earnings growth is set for a healthier runway through 2024,” Morgan Stanley analysts noted.

“While earnings estimates for the S&P 500 for 2024 and 2025 have barely moved over the past 6 months, we believe that investor confidence in the achievability of those estimates has increased,” they added.

The market view is backed by Morgan Stanley’s earnings model, which projects 10-15% growth on a forward 12-month basis.