Survey Finds Renewed Hunger for Growth and High Expectations for 2025, though Shift ‘From Political to Policy Uncertainty’ Keeps Outright Bullishness at Bay

  • Both investor sentiment and perceived executive tone exhibit double-digit improvement QoQ, a notable shift from the bull-bear barbell observed last quarter
  • 46% expect earnings results to be In Line with consensus, while those anticipating beats increases from 34% last quarter to 42%; a majority, 54%, anticipate Better Than sequential earnings performances
  • Nearly 8 in 10 investors now expect the U.S. to dodge a recession, up from 38% QoQ, marking the lowest level of apprehension observed in two years
  • Over half cite Policy Uncertainty as the leading concern, followed by Tariffs
  • Focus on growth has accelerated, with more prioritizing growth to margins, 67% to 33%, respectively; Reinvestment is highlighted as the top preferred cash usage, followed by Debt Paydown and M&A

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Corbin Advisors, a strategic consultancy accelerating value realization globally, today released its quarterly Earnings Primer®, which captures trends in institutional investor sentiment. The survey, which marks the 61st issue of Inside The Buy-Side® Earnings Primer®, was conducted from December 10, 2024 to January 3, 2025, and is based on responses from 62 institutional investors and sell-side analysts globally, representing ~$913 billion in equity assets under management.

Following last quarter’s survey which found a notable divergence in stances, with the highest level of bears registered in over a year and downward guidance revisions expected, the Voice of Investor® captured in this quarter’s survey reveals a notable pickup in sentiment but with new and persistent challenges tempering outright bullishness, including policy uncertainty and tariff concerns.

Rebecca Corbin, Founder and CEO of Corbin Advisors, commented, “Following the election-cycle overhang and the bull-bear standoff identified in Q3, our latest survey highlights a spike in investor optimism. Recession apprehension has diminished significantly, GDP projections have warmed, and ‘growth mode’ has emerged as a dominant theme, with growth taking priority over margins and reinvestment dethroning debt paydown as the top preferred use of cash after 10 consecutive quarters. However, uncertainties — including policy shifts linked to tariffs and renewed inflationary concerns — are top of mind and keeping a lid on unbridled enthusiasm. Amid lofty expectations for revenue and EPS for both Q4 results and annual guides, our channel checks suggest demand is not yet tracking with sentiment, putting companies in a potential pickle as they look to issue annual guides in the coming weeks and months. While animal spirits are aswirl, we recommend conservatism when it comes to 2025 outlooks, including leveraging wider ranges to account for uncertainty and volatility amid the administration changeover. For this earnings season, investors remain keyed into growth and demand, as well as margins and expense management, while capital allocation and tariffs both see boosts in interest.”

Nearly two-thirds of investors, 65%, report current sentiment as Neutral to Bullish or Bullish, up from 45%, while those characterizing views as Neutral to Bearish or Bearish more than halved QoQ at 15%. As for executives, 72% are perceived as Neutral to Bullish or Bullish, a notable uptick from 42%. Taken together, these figures reflect the most optimistic sentiment levels recorded since Q2’21.

U.S. recessionary concerns have abated to a minority view. Nearly 80% expect the U.S. to dodge a recession, representing the lowest level of concern observed in two years, and over half expect 2024 U.S. GDP to come in more favorably than initially anticipated. Consequently, growth is being prioritized over margins at this point in the cycle by a 2:1 ratio.

Capital allocation preferences further underscore this growth focus. To that end, 66% of respondents favor Reinvestment as the top use of cash, a 27-point increase QoQ, followed by Debt Paydown (46%) and M&A (32%). Notably, support for M&A has climbed for two consecutive quarters and now stands just 5% shy of the five-year high recorded in Q4’21.

Still, sentiment is firmly caveated throughout responses with several looming unknowns. Policy Uncertainty remains the leading worry for 60% of respondents, while 45% cite Tariffs, a 42% QoQ increase. While only 14% report a negative shift in sentiment due to the result of the U.S. Presidential election, 87% express heightened or sustained concern over U.S. trade and tariffs when aided — a 26% sequential uptick. Inflation, which many believed was receding in last quarter’s survey, has reemerged as a key issue, jumping 17 points to 28%.

"The Federal Reserve outlook and communication are challenging. The market and I are struggling to know exactly what the path of the Fed is. Another major concern is the health of the economy — given it is a presidential transition year, it creates a little more uncertainty about the path forward for the economy, inflation, and unemployment," commented a portfolio manager whose firm manages $2 billion in EAUM.

Continuing, 46% of investors expect earnings results to be In Line with consensus, while those anticipating beats rises to 42%, up from 34% last quarter. Investors hold high expectations for Q4 KPIs, particularly for Revenue, EPS, and FCF, each of which sees the highest proportions of investors expecting sequential improvement since 2021. In contrast, Margins are viewed more neutrally, with a majority expecting results to Stay the Same. Looking ahead, over 50% expect executives to issue Higher Revenue and EPS guidance compared to 2024 actuals, while Margins and FCF are largely forecasted to remain In Line.

Regarding broader views on global economies over the next six months, investors maintain their positive outlook on India, flanked by the U.S. and Southeast Asia. However, following the U.S. Presidential election, Canada and Mexico are projected to Worsen, with the latter receiving the highest level of pessimism since the COVID pandemic onset. China views remain downbeat despite recent stimulus measures.

Turning to sector sentiment, Tech holds its position as the most bullish sector, with Energy and Biotech following closely behind after recording the largest QoQ sentiment gains. Healthcare, once a top bullish bet throughout 2024, sees a significant drawdown in optimism, though outright bearish views remain limited. Meanwhile, Clean Energy surpasses Consumer Discretionary as the sector attracting the most bears at this time.

About Corbin Advisors

Since 2007, Corbin Advisors has tracked investor sentiment on a quarterly basis. Access Inside The Buy-Side® and other research on real-time investor sentiment, IR best practices, and case studies at CorbinAdvisors.com.

Corbin is a leading investor research and investor communications advisory firm accelerating value realization globally. We engage deeply with our clients — companies ranging from pre-IPO to over $500 billion in market cap across all sectors globally — to increase equity market value. We deliver research-based insights and execution excellence through a cultivated and caring team of experts with deep sector and situational experience, a best practice approach, and an outperformance mindset. We have a long track record of delivering successful client outcomes, most notably through rerating and compounding equity valuations through our Voice of Investor® research and counsel.

Inside The Buy-Side®, our industry-leading research publication, is covered by news affiliates globally and regularly featured on CNBC.

To learn more about us and our impact, visit CorbinAdvisors.com

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