Bank of America CorporationAnalyst Savita Subramanian said that as supply chain problems worsen, the 2022 earnings guidance issued by companies in this earnings season is likely to be ugly.
Third-quarter profit is expected to be largely in line with Wall Street expectations, but the guidance for fiscal year 2022 is expected to fall.
It cut its forecast for third-quarter earnings per share in the S & P 500 to $49 from $51, compared with a consensus forecast of $49.13.
She noted that corporate earnings fell short of consensus expectations in only two of the past 50 quarters, in the second quarter of 2011 and the first quarter of 2020.
The earnings forecast for fiscal 2022 is considered "hugely risky" as analysts continue to expect record profit margins despite concerns about whether companies can pass on costs.
Rising commodity prices and wage inflation also pose risks to the outlook for 2022, she said, advising to hold the technology, real estate and energy sectors, while avoiding utilities and consumer sectors until third-quarter results are released.