It looks like the perenially optimistic analyst community is finally getting the message that the recession will be nasty. From Bloomberg:
Analysts are slicing profit forecasts for U.S. companies in the fourth quarter and 2009 as third- period results miss projections at the highest rate in almost 11 years.
“Estimates have been coming down with a vengeance,” said Dirk van Dijk, director of research at Zacks Investment Research Inc. in Chicago. “It’s just plain ugly out there.”
Companies in the Standard & Poor’s 500 Index may see fourth-quarter earnings advance 15 percent, down from 42 percent projected at the end of August, according to a Bloomberg survey of analysts’ estimates. Profits in 2009 may grow 13 percent, analysts say now, compared with the 24 percent predicted two months ago.
Financial firms worldwide have posted almost $700 billion in credit-related losses and writedowns since the beginning of 2007, in the worst economic crisis since the Great Depression. The S&P 500 is down 35 percent this year, headed for its worst annual performance since 1937.
“Wall Street has underestimated the negative impact on corporate earnings of the ongoing global economic deterioration,” said Alec Young, an S&P equity strategist in New York. “We’re still finding out where the bottom is.”
Um, I am missing something. Analysts are still calling for earnings growth? Ooh, wait for further revisions…