UBS has issued a report warning of earnings disappointments during the upcoming reporting season, with the impact of the depreciating Australian dollar...

UBS has issued a report warning of earnings disappointments during the upcoming reporting season, with the impact of the depreciating Australian dollar providing the only respite. Already, broker downgrades and underwhelming guidance have ravaged numerous stocks, with positive reports far and few between. In particular, UBS notes that FY13 consensus earnings growth has fallen from 3% six months ago to 0% at present along with an increase in stock-specific profit downgrades. Furthermore, it expects downside surprises to outnumber upside surprises 3 to 1, in contrast with the numerous upside surprises in value stocks last reporting season. UBS believes the only upside will come from companies with foreign earnings benefiting from a lower Australian dollar. Looking forward to FY14, UBS sees little change in macro-economic conditions, forecasting 6% earnings growth on further depreciation of the local currency and companies focusing on corporate efficiency. (VIEW LINK)