SOURCE: Five Star Equities

Five Star Equities

October 25, 2012 08:20 ET

Collective S&P 500 Companies Earnings to Decline in the Third Quarter for the First Time in Three Years

Five Star Equities Provides Stock Research on Netflix and Pfizer

NEW YORK, NY--(Marketwire - Oct 25, 2012) - The S&P 500 Index has performed admirably so far in 2012, gaining roughly 15 percent year-to-date, but is expected to experience a bit of a slowdown as we head into third quarter earnings season. Approximately 69 percent of S&P companies who have reported third quarter results so far have beat analysts' estimates on earnings, while 59 percent of companies have missed sales forecasts according to data from Bloomberg. Five Star Equities examines the outlook for companies in the S&P 500 Index and provides equity research on Netflix, Inc. (NASDAQ: NFLX) and Pfizer Inc. (NYSE: PFE).

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Collective third quarter profits for companies in the S&P 500 are expected to decline in the third quarter for the first time in three years according to analysts' estimates collected by Bloomberg. Analysts have now lowered their projection to a 0.3 percent drop in S&P 500 earnings for the third quarter, compared with an estimate of a 2 percent decline in late September.

"The market has been decently resilient," Tim Hoyle, director of research at Haverford Trust Co., said in a recent phone interview. "We went into the earnings season with very dire expectations. So far they haven't been specifically horrible, but there are definitely specific cases where we do see earnings came in weaker than expected."

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Netflix reported that for the third quarter of 2012 a total of 1.16 million U.S. streaming subscribers were added, which fell short of analysts' estimates of 1.43 million additions according to Bloomberg. For 2012, the company now expects to add 5.4 million new users, down from an earlier prediction of 7 million. "Streaming growth is slowing to a crawl, while their DVD business is generating 90 percent of all profit -- and that's declining super-fast," said Michael Pachter, an analyst at Wedbush Securities Inc.

Pfizer has recently reported that it plans to acquire NextWave Pharmaceuticals. NextWave's ADHD drug Quillivant XR was approved by the U.S. Food and Drug Administration in September, and is expected to be sold in pharmacies beginning in January. Pfizer is scheduled to release their third quarter 2012 earnings on October 31, 2012.

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