Investing.com -- Stocks that missed earnings expectations have been punished more severely than usual this reporting season, despite the magnitude of the misses being in line with historical trends, according to Barclays (LON:BARC).
"Negative share price reactions to EPS misses have been greater than average this reporting season," Barclays analysts wrote.
They noted that while the median earnings miss of -3.3% was not much worse than in recent quarters, stocks reacted sharply, with the average post-earnings move nearly 100 basis points lower than the long-term average.
At the same time, stocks that beat earnings expectations have seen price reactions in line with historical norms, Barclays said. Analysts attributed the harsh selloffs for misses to severe downward revisions ahead of reporting season, which lowered the bar for earnings beats while making earnings misses appear even worse.
The firm also pointed out that "the beat-to-miss ratio of 4.7x vs. LT average of 3x" and "EPS growth of 10.4% vs. LT average of 8%" suggest that investors had higher expectations going into earnings season.
Additionally, Barclays flagged concerns about the next quarter’s outlook, noting that "1Q25 revisions for SPX ex-Big Tech are trending -100bp below the LT average."
Barclays concluded that with a few reports still to come, investors are likely to "find plenty to nitpick by the end of this reporting season."