As companies get set to release their latest results, one research director said revisions have been moving lower amid persisting uncertainty regarding macroeconomic conditions. 

Sheraz Mian, the director of research at Zacks, said in an interview with BNN Bloomberg Tuesday that while there has been some stabilization in the market, revisions have been moving downward since “peaking in April last year.” 

“The magnitude of revisions that we saw for the Q1 earnings season…while lower and negative was not as negative as we had seen in the prior two quarters,” Mian said. 

“There's continued uncertainty about the macro picture, about the margins outlook, and how management teams see the underlying business picture evolving in the coming period.” 

FINANCIALS 

Within the financial sector, Mian said the current conditions favour larger money centres. 

“In the wake of the Silicon Valley Bank and other issues surrounding the regional community, banks have been under pressure for a while. And [banks] have been experiencing [a] significant flight of deposits from them, with large money centers benefiting from that trend,” he said. 

Mian said that overall banking remains strong as the current higher interest rate environment has lifted margins. 

“The other sources of business, investment banking and trading, particularly investment banking, is significantly down on a year-over-year basis, primarily a function of weakness in the market,” he said. 

TECHNOLOGY

Currently, the technology sector has been experiencing weakness over the past “couple of quarters,” Mian said, adding that the trend has been the opposite of how the sector performed during the pandemic. 

“The weakness in tech is essentially a give back for the strong performance that the group had,” he said. 

“So about an 18 per cent earnings decline is expected for the group in Q1 and about [a] five [to] seven per cent revenue decline. It's getting close to the endpoint, but we're not there yet.” 

Despite the downward trend in the technology sector, Mian said there is still a high degree of optimism in the market. 

“My sense is that perhaps we are still a couple of quarters away from business conditions stabilizing and then reversing course,” he said. 

ENERGY 

While volatility has weighed on other sectors, energy has performed well, according to Mian. 

“Energy has been a big beneficiary the past couple of years. It's still positive,” he said.

Mian said that revisions have been moving lower over the last three to four months, but are still positive. 

“So the group is expected to bring in positive earnings growth, but the magnitude of growth is a lot less than [what] we have become used to seeing from the space in the last few quarters,” he said.