Companies Miss Their Revenue Targets

revenue-target Much is being made of the fact that over 70% of U.S. companies are beating their low-balled earnings estimates, but the majority are still missing their revenue targets (as per Verizon and Honeywell in yesterday’s reports ‚Äî top-lines down 6.7% and 22% respectively). Even so, a momentum-driven market will always be driven by just that ‚Äî momentum; and there’s no doubt that investor risk appetite is being whetted. But after paying for the end of the recession in May, the market is now pricing in 40-50% earnings growth for next year, and while costs have aggressively been taken out of the system, this sort of unprecedented profits revival can only occur in the context of a V-shaped recovery, which I give 1-in-50 odds of occurring.

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