Earlier today I revealed three shares that Goldman Sachs had tipped to provide the market with a disappointing full-year guidance update in May.
While those three shares could carry some downside risk as we move into May, four other shares that the broker thinks could have upside risk next month are listed below.
Here’s why Goldman Sachs thinks they could be about to upgrade their earnings guidance:
Bingo Industries Ltd (ASX: BIN)
According to the note, Goldman thinks that this waste management company’s strong first-half performance, price rises introduced in the second-half, contributions from acquisitions, strong demand from building and demolition customers, and new contract wins could lead to a stronger than expected result. I would agree with Goldman on this one and think Bingo would be a great investment.
Bravura Solutions Ltd (ASX: BVS)
Although Bravura’s guidance for underlying EPS growth in the high-teens is in-line with Goldman’s forecasts, it believes there is a chance it could outperform. This is due to a strong pipeline of work from existing customers, new client wins, and operating leverage. An earnings beat would be great, but even if it only achieves its guidance I think Bravura’s shares are great value.
Lifestyle Communities Limited (ASX: LIC)
Due to potentially stronger settlements than the market is expecting, Goldman thinks that this retirement living provider could surprise to the upside. Goldman has estimated 300 settlements in FY 2018, compared to the company’s upgraded guidance of 285 to 315. I like Lifestyle Communities for its exposure to Australia’s ageing population, so it could be worth considering given this upside risk.
Qantas Airways Limited (ASX: QAN)
Goldman notes that historically Qantas provides its profit before tax guidance when it releases its third-quarter trading update. The airline is due to announce its third-quarter update on Wednesday with the market (and Goldman Sachs) expecting a figure of $1,550 million. However, the broker sees potential upside to its earnings due to strong year-to-date aviation statistics for the domestic market. strong forward bookings for the Dreamliner launch, a lull in oil prices, and the benefits of its Singapore Hub strategy. As long as oil prices don’t spiral out of control, I think Qantas could be a good investment.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Bravura Solutions Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.