Morgan Stanley highlights stocks that could see big Q3 earnings surprises
Stocks that could win big this earnings season include Roblox and Capital One Financial , according to Morgan Stanley. The third-quarter earnings season ramps up next week, with the nation’s largest banks on the docket to report results. Analysts forecast another stellar quarter of results, with the estimated year-over-year earnings growth rate for the S & P 500 coming in at 8% — the ninth consecutive quarter of earnings growth. Before the start of third-quarter earnings season, Morgan Stanley shared a list of its overweight-rated stocks that are reporting earnings in the next month and are most likely to show profits in excess of what the Street is expecting. Some of the companies in the basket are listed below: One stock that Morgan Stanley highlighted was Roblox, which reports earnings Oct. 30. Shares of the online game platform have more than doubled in the past six months, surging 138% through Tuesday. Last week, Wells Fargo raised its price target to $155 per share, up from $153. Analyst Ken Gawrelski’s updated forecast is 24% above where Roblox closed Tuesday. “We believe the company’s recent expansion into the ad business represents a large opportunity and see material upside potential to current Street estimates for both bookings and EBITDA, driven by meaningful contribution from ad bookings starting in 2025,” Gawrelski wrote. Wells Fargo has an overweight rating on Roblox. Morgan Stanley also favors Capital One Financial, which reports on Oct. 20. The bank and credit-card issuer has rallied 20% this year, outperforming the 14% gain in the S & P 500. Barclays analyst Terry Ma named Capital One a favorite idea in the U.S. consumer finance arena in a research report on Monday. “We expect an acceleration of buybacks in 3Q and the start of a more robust capital return plan,” Ma wrote, adding that an expansion in Discover Financial Services’ network acceptance globally may prove an additional tailwind for Capital One. Ma has an overweight rating Capital One and his 12-month price target of $257, up from an earlier $253, corresponds to 20% upside from the bank’s Tuesday close. Another stock that Morgan Stanley expects will report strong earnings this quarter is Reddit , due to release results on Oct. 27. The social media stock has soared 121% in the past six months. Oppenheimer raised its price target on Reddit to $300 in September, up from a previous $215 . Analyst Jason Helfstein’s new objective forecast implies the stock could rise 46% from Tuesday’s close. “We believe Reddit is well positioned to continue gaining share of the ~$250B digital ad market ex-GOOG and META. Early monetization efforts have been successful, with pricing holding steady as impressions increased significantly in 2024,” Helfstein wrote. “We believe Reddit’s > 2B posts and > 20B comments is one of the best-written and most authentic sources of human interaction on the internet.” ( Learn the best 2026 strategies from inside the NYSE with Josh Brown and others at CNBC PRO Live. Tickets and info here . )
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