"Estimates have come down more dramatically than usual," warns BofAML's Savita Subramanian as so-called "analysts" slash their expectations to lower the bar even further for firms to hop over. This hype-hope-reality plunge in expectations is nothing new as the chart below shows but Q1’s gap between the starting and ending growth rates was 5.6 percentage points - the widest gap in at least 18 months. The widest spread for 2013 was 4.4 points, recorded in the second quarter. The reductions may help firms beat expectations but do nothing to sustain the hype priced into markets.
Once again we ask, why do we listen to analysts?
Chart: Bloomberg