With earnings season now behind, it's time to focus on the second half of FY 2023.
And while the next few months are likely to be very successful for many companies, this may not be the case for all.
According to a note out of Morgans, its analysts believe that some ASX shares are expecting too much from the half. So much so, it suspects that they could fall short of guidance and is warning investors to be careful.
Which ASX shares could disappoint in the second half?
Morgans has warned that there are six ASX shares in particular that could be destined to disappoint in FY 2023.
These are energy company AGL Energy Limited (ASX: AGL), packaging giant Amcor (ASX: AMC), health and safety products company Ansell Limited (ASX: ANN), baby products retailer Baby Bunting Group Ltd (ASX: BBN), property listings company Domain Holdings Australia Ltd (ASX: DHG), and telco Superloop Ltd (ASX: SLC).
The broker highlights that with their guidance for the full year maintained after a soft first half, they will need a significant improvement in their performance in the second half. This is something that is far from guaranteed in the current environment. It commented:
Notable companies (DHG, AGL, AMC, BBN, ANN, SLC) missed forecasts in February. Still, they maintained their full-year guidance, setting the scene for potential earnings disappointment if operating conditions don't recover as planned.
Consensus industrial estimates suggest a second half earnings skew (49%:51%) which is curious given the economic backdrop and is at odds with the typical pre-COVID first half skew (56%:44%). More specifically, 49% of companies are expected to be skewed to 2H, well above the 25% in pre-COVID times. So if post-reporting earnings trends hold, small caps could be again vulnerable at the upcoming May 'confession' season.
