The fourth-quarter earnings reports from Europe's top companies should be better than those of the third quarter, according to Deutsche Bank, set against a backdrop of an improvement in the global economy and a drop in the number of profit warnings.
"As the earnings season kicks off properly this week, our indicators are suggesting that the beat ratio could be at least in line with Q3 when 55 percent of companies reported better than expected results," analysts at Deutsche Bank writes in a note.
"Based on the number of times the term 'profit warning' is searched for on Google, we have seen a fall back down to levels last seen during 2010 when the beat ratio averaged 65 percent," added the Deutsche strategists.
Deutsche added it expected to see a 6 percent annual growth in net income on average in Europe, coupled with 4 percent revenue growth.
Deutsche also wrote that the STOXX Europe 600 chemicals sector could deliver a good set of results, with its analysts expecting forecast-beating results from Syngenta and BASF.
It added that the UK stock market might post results weaker than those of the third quarter, when 72 percent of UK companies beat forecasts with their results, while earnings prospects had improved the most in Switzerland.
"Between countries, the earnings momentum (change in the earnings revisions ratio) has deteriorated the most for the FTSE 100 and improved most for the (Swiss) SMI," it wrote.
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