CNBC’s Jim Cramer said Thursday that a possible cut in earnings estimates from analysts could lead to a sell-off and give investors some buying opportunity.
“Over the next few weeks, before earnings season begins, I expect analysts to hit us with some pre-anticipated cuts, while more companies hit us with negative pre-announcements,” he said.
“It’s going to be bad for the average, but once the sell-off hits and we cross the projection cut for 2022 and 2023, that’s what happens. When we don’t have a tradable bottom like this would be rather an investment worthy,” he added.
,mad MoneyThe host’s remarks come after a turbulent earnings season due to inflation, which saw companies fall short of Wall Street’s expectations.
Cramer said he believes analysts’ consensus estimates for stocks in the S&P 500 are too high, and they need to come down because unless bad news has baked into stock prices, Till then the markets don’t come down.
“They’re forecasting 8% growth, followed by 11% next year. I find it hard to believe. The eight percent to eleven percent earnings growth is basically what you’d expect in an average year,” he said.
He said that in recent weeks many companies have given good quarterly reports but given disappointing guidance.
“You’ve had these really great quarters, but they’re saying things are going downhill. People like them because they think the guesswork cut is finally done. I’m not sure,” he said.
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