Slashing earnings estimates significantly down

Historically, in one year, analysts’ EPS estimates (IBES F1) fell by about 4.4% for MSCI World, 1% for S&P500 and 3.9% for MSCI EMU.
We refer to the one year time frame which is needed to move from financial year 1 forward earnings (current 2020) to actual earnings (i.e. F1 to F0 in IBES terms). Every calendar estimate has a life duration of four years and the typical decay is -22% in the period (for EMU), 76% in the worst case, with a very high standard deviation of 25%.


  • We significantly cut our estimates for the US and EA and are currently 27% and 28% below the IBES consensus for the corresponding markets.
  • Risk premia are near Lehman times but earnings dispersion is still worrying and both economic and earnings consensus forecasts have more room for further downside.
  • Usually, after deep drops in earnings the first year of recovery sees huge earnings upside, above 30%. We are more conservative and use 20%.
  • On a 12-month horizon, even using as input -38% and -30% earnings cut from peak (euro area and US resp.), we see the chance to realize double digit total returns, which encourage us to adopt a limited overweight on equities.
  • Risks: postponed contagion peak and cities’ lockdown with further negative impact to the economy and earnings forecasts.

Download the full publication below



Oxford University/AstraZeneca vaccine will undergo a new global trial as critics questioned the claim that it could protect up to 90% of people against coronavirus. Hetero, one of India’s leading pharmaceutical companies, agreed to produce over 100 million doses of Sputnik V vaccine. Brazilian president Jair Bolsonaro said he will not take a coronavirus vaccine.
Generali Global Infrastructure launches two infrastructure funds to support the European recovery
Milan – Infrastructure assets are considered key in re-shaping a sustainable and resilient recovery path for Europe together with a greener, more digital and people-centered world. To support this transformational shift Generali Global Infrastructure1 (GGI), a boutique focused on infrastructure debt and part of Generali Group’s multi-boutique asset management platform, has launched two infrastructure funds supporting the European recovery.
Since March, credit markets have retraced a large part of the Covid-related spread widening, alongside rebounding risk sentiment. Although the rally has been substantial, it has remained defensive with IG outperforming HY on a beta- adjusted basis. The main reason in our view have been concerns about rising defaults.