The outlook for this earnings season looks bleak, but Bank of America thinks there are some companies that can still deliver upside surprises. Analysts on average expect S & P 500 earnings fell 7.2% during the second quarter from the year-earlier period, according to FactSet. If that’s the case, it would mark the biggest year-over-year profit decline for the benchmark since the second quarter of 2020 — when earnings plunged 31.6%. The season kicks off this week, with banking giants JPMorgan Chase , Wells Fargo and Citigroup set to report. Delta Air Lines and Pepsico are also on deck. Despite the gloomy outlook for corporate profits, there are some stocks that are more likely than others to surprise to the upside. Bank of America screened the S & P 500 for companies that are most likely to beat consensus earnings expectations. To find these names, the bank used this criteria: BofA earnings estimate above the Street consensus Companies that beat earnings per share and revenue during the last reporting season Carry buy ratings from BofA analysts BofA found 12 such stocks that met its criteria. Here are five of them: Meta Platforms made the list. The stock has been on fire this year, as the Instagram parent cuts costs and gains momentum from the artificial intelligence craze. In 2023, the stock has more than doubled, climbing 144%. Recently, Meta has also gotten a boost after launching Threads, a rival app to Twitter. Since its release last week, Threads has attracted more than 100 million users. Meta is slated to report second-quarter earnings on July 26. SolarEdge also made the cut. The solar stock is down more than 6% year to date. However, Bank of America’s $396 price target implies upside of nearly 50% over the next 12 months. “SEDG shares have underwhelmed, as investors remain concerned about the components outlook across geographies,” analyst Julien Dumoulin-Smith wrote in late June. “We argue these concerns seem misplaced, and point to EBITDA acceleration in 2H23, driven by compounding operating leverage and further [commercial and industrial] and storage deployments.” SolarEdge is expected to report on Aug. 2. Other names that made BofA’s list include D.R. Horton , United Rentals and Corning . — CNBC’s Michael Bloom contributed reporting.
