Some of the shine may come off the record breaking Afterpay Ltd (ASX: APT) share price this profit reporting season.
The BNPL champ has been winning the hearts of ASX retail investors with some of the best returns on the S&P/ASX 200 Index (Index:^AXJO), but this goodwill will be put to the test this month.
Goldman Sachs warns that Afterpay is one of the six ASX stocks that are likely to unveil negative surprises when they hand in their earnings report card.
Risk of higher than expected costs
While attention will likely be on top-line measurements (such as customer growth, new merchant sign-ups, active users, etc), the risks comes from capex.
"There is still a risk we are under-estimating the cost investment that may be required to drive what we otherwise expect to be strong top line growth," said the broker.
Having said that, the growth in the business is unlikely to disappoint given the strong momentum Afterpay is achieving.
On the other hand, let's not also forget there's a lot of good news priced into the Afterpay share price, which makes it vulnerable to any negative surprises.
Goldman rates Afterpay as "neutral" with a 12-month price target of $70.15 a share.
Turbulence ahead
Afterpay isn't the only one carrying downside risk. The Qantas Airways Limited (ASX: QAN) share price is another that could make shareholder nervous.
The airline is guiding for a pre-tax profit of between breakeven and a small positive number excluding $2.8 billion in one-off charges.
But with the new stage four Victorian lockdowns and increasing cross border restrictions, it's hard to imagine its outlook commentary being anything but sombre.
However, Qantas is still better placed than the Air New Zealand Limited (ASX: AIZ) share price.
"Recovery of domestic activity has been taken positively by the market," said the broker.
"However, without international activity (incl Trans-Tasman) we believe the carrier will struggle to return to cashflow breakeven given structurally high operating cost base."
Goldman's recommendation on Qantas is "neutral" and Air New Zealand is "sell". The broker's price target on the flying kangaroo is $3.82, while the latter is NZ$0.90 (its dual listed).
Other potential profit season disappointers
Other stocks on the August reporting season "sin list" include the Boral Limited (ASX: BLD) share price, the Charter Hall Group (ASX: CHC) share price and Transurban Group (ASX: TCL) share price.
Building materials supplier Boral could be a capital raising candidate as the new CEO looks to restructure the troubled group.
Meanwhile, the market may be underestimating the risk of write-downs from property group Charter Hall due to the COVID-19 fallout.
Finally, the hard lockdown in Melbourne is bound to have a material impact on toll road operator Transurban.
