Investors should pay attention to companies whose earnings could disappoint and send their stock prices down. Wall Street has been lowering its third-quarter growth forecasts for months. According to a recent report from FactSet, S&P 500 earnings are expected to grow 4.2% from the same period last year, down from the 7.8% forecast on June 30. Expectations tend to be lower than in previous months. Nearly 10% of S&P 500 companies have reported results, with more than 79% of them beating earnings expectations, according to FactSet. However, there are a few names that could still disappoint. To find possible stocks, CNBC Pro sifted through FactSet for S&P 500 stocks set to report next week. Earnings estimates for these companies have been cut by at least 10% over the past three and six months. Investor confidence in Valero Energy fell sharply ahead of the release of quarterly results on Oct. 24. Analysts’ earnings per share estimates have been revised down 80.3% over the past three months and 85% over the past six months. Still, the stock is favored by 60% of Wall Street analysts. One of them is Morgan Stanley analyst Joe Laetsch, who gives Valero an overweight rating and a $165 price target. This suggests potential upside of 22.5% for the stock, which has gained about 4% this year. “We believe VLO is well-positioned in the current tight refining environment with its downstream business being sizable relative to peers,” Laetsch said in a note on Tuesday. “Its asset base is well managed and we believe VLO will continue to execute, Enphase Energy has also been on the screen, with analysts surveyed by FactSet lowering their earnings-per-share estimates for the stock by nearly three percent over the past three months and six months, respectively. 39% and 35.5%. Less than half of analysts rate the stock a buy. RBC Capital Markets analyst Christopher Dendrinos recently downgraded his outlook on the stock, downgrading Enphase to industry perform from outperform on Tuesday. He also lowered his price target by $25 to $100, implying a potential upside of 8.6% for the battered stock. Dendrinos’ new outlook for the name reflects his concerns about Enphase’s growth slowing next year amid sluggish demand in the residential solar market. He said continued adoption of third-party ownership (TPO) systems in the United States could also impact Enphase’s demand growth because the company has a smaller market share in TPO systems compared with its competitors. Enphase said that through the TPO model, the installer retains ownership of the energy system while the homeowner pays a monthly panel or electricity bill. The company, which will report earnings on October 22, is down 30% year to date. Tesla will release earnings after the market closes on October 23. The company still has a high hurdle to overcome before its shares can surge higher, as the struggling electric-vehicle maker disappointed with third-quarter deliveries and the launch of its much-hyped robotaxi earlier this month. Failed to impress investors. Analysts have cut Tesla’s earnings per share estimates by 24.1% over the past three months and by 30.8% over the past six months. Overall, 34.5% of analysts rate the automaker a Buy. Wells Fargo, which is pessimistic about Tesla’s earnings, reiterated its underweight rating on Tuesday and said it expects the company’s third-quarter results to miss expectations.
