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Leading broker tips 9 ASX shares to positively surprise during earnings season

With earnings season just around the corner, analysts at Goldman Sachs have been looking at the companies that they believe could surprise later this month.

The broker has named nine shares that it believes could positively surprise in February and six which it fears could negatively surprise.

For now, I am going to focus on the shares that Goldman Sachs has tipped to positively surprise this month. Four that stood out are listed below:

Afterpay Ltd (ASX: APT)

Goldman Sachs believes that if the trends seen in November/December continued, Afterpay’s customer additions and GMV could exceed its estimates by around 10%. It also suspects that its net transaction profit (NTP) margins, combined with the potential upside to merchant sales, could provide a significant positive surprise. Overall, the broker sees the potential for significant upside risk to its half year forecasts.

CSL Limited (ASX: CSL)

Thanks to highly favourable immunoglobulins market dynamics, lower sales from a key Kcentra product competitor, and a strong start to the northern hemisphere flu season, Goldman Sachs sees the potential for upside surprise to the market’s expectations for CSL in the first half.

Domino’s Pizza Enterprises Ltd (ASX: DMP)

Due partly to strong momentum in Japan and improving execution in Europe, the broker expects this pizza chain operator’s first half comparable store sales growth to be 4.6%. This compares to consensus expectations of 3.3% growth for the half. In addition to this, Goldman expects to see margin expansion in both Japan and Europe as a result of the strong execution. It also believes the capital recycling from the sale of stores in Japan to franchisees will have assisted in maintaining its first half capex below A$50 million.

JB Hi-Fi Limited (ASX: JBH)

Following a surprisingly strong first quarter update, Goldman Sachs appears confident this trend continued in the second quarter. Its industry feedback suggests that execution at JB Hi-Fi has been strong and demand for consumer electronics has been robust. In addition to this, it suspects that extreme weather conditions and poor air quality are likely to have been a positive for the sale of seasonal products as well as products like air purifiers. It expects first half comparable stores sales growth to be at +3.3% in JB Hi-Fi Australia and +3.5% in New Zealand. Overall, it has forecast first half EBIT of $249 million, ahead of consensus estimates of $244 million.

The other candidates.

Other positive surprise candidates to watch out for this month include Freedom Foods Group Ltd (ASX: FNP), IMF Bentham Ltd (ASX: IMF), Monadelphous Group Limited (ASX: MND), Sims Ltd (ASX: SGM), and Worley Ltd (ASX: WOR).

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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Domino's Pizza Enterprises Limited and Freedom Foods Group Limited. 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.