Will BofA, Apple Save Earnings? Analyst Weighs In

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Although corporate outlooks are at their most negative in nearly four years, one analyst discussed two companies that are likely to be earnings bright spots.

In an interview with CNBC’s “Worldwide Exchange,”John Butters, a senior earnings analyst at FactSet, forecasts earnings growth for the S&P 500of about 3 percent, which would be the lowest rate in about three years.

According to FactSet's earnings insight report, most of this growth is expected to come from just one company, Bank of America, which is forecast to turn a small profit this quarter after reporting a large loss a year ago.

“If we exclude Bank of America, that 3 percent expected growth of the index drops down to a decline of (about) 2 percent,” Butters said.

In the tech sector, which has been hit by weakness in Europe and the emerging markets, Apple is likely to be the largest contributor to growth, according to FactSet estimates.


“Overall in tech, we’re looking for about 3 percent as well, but if you remove Apple, that growth rate drops down to a decline of about 2.5 percent,” he said.

Although this quarter and the third quarter likely will not be earnings homeruns, markets will be paying close attention to fourth-quarter guidance.

In that quarter, analysts expect a rebound of nearly 14 percent earnings growth, with double-digit growth in a number of sectors.

Butters noted another trend in earnings of higher revenue growth than earnings growth due to higher labor and marketing costs.

“Seven of the 10 sectors in the index are projected to report higher revenue growth than earnings growth for the quarter, which indicates that companies are having difficulty converting sales growth to earnings growth in (the second quarter of) 2012,” the report noted.

—By CNBC.com’s Katie Little

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Disclosure information was not available for John Butters.



Follow Katie Little on Twitter @katie_little.