Earnings estimates could be the "next shoe to drop" as the likelihood of a recession this year grows, according to Deutsche Bank. Equity strategists at the investment firm said that earnings estimates for mega-cap growth and tech stocks are still elevated given the worsening economic outlook. On Wednesday, traders awaited the conclusion of two-day policy meeting from the Federal Reserve that may result in a larger-than-usual 75 basis point interest rate hike as the central bank tries to curb inflation. Meanwhile, stocks remain at depressed levels from their highs. This week, the S & P 500 tumbled deeper into bear market territory, trading more than 21% below a record. The Nasdaq Composite is 32% off its highs. "Estimates are too high in our base case scenario of a modest recession by the end of 2023 and significantly so if a recession were to hit imminently," strategists led by Binky Chadha said in a note Tuesday. Wall Street is currently projecting earnings per share of $231 for 2022, and $254 for 2023. Those consensus forecasts are higher than estimates from Deutsche Bank, which lowered its earnings per share forecast for the current year to $227, a 1.5% cut from $230. It also trimmed its 2023 forecast to $234, a 4.5% cut from $245. An imminent recession could mean earnings per share could fall to $185 by late 2023, Deutsche said. Growth and tech vulnerable Mega cap growth and tech stocks are vulnerable to elevated earnings expectations. Deutsche Bank expects earnings for these companies to be flat, while the consensus is for continuing earnings growth going forward. "So estimates remain vulnerable to significant downgrades (-16%) even if we do not fall into a recession imminently and of course much more so if we do," Deutsche said. Earnings estimates for cyclical stocks excluding energy and financials are 15% too high, according to Deutsche Bank, even as Wall Street believes they will climb even higher. "This is clearly disconnected from macro forecasts for the path of the cycle, which points to them reverting down to trend and even falling a little below," the firm said. Meanwhile, Deutsche Bank believes earnings estimates for pandemic recovery names look reasonable, given a consumer return to travel. However, even these plays are vulnerable to a downturn.