13 bullish + 2 bearish! Morgan Stanley reveals opportunities for the second quarter, with S&P earnings per share expected to increase by 5%

Morgan Stanley's strategy team recently released a research report, focusing on 15 stocks with short-term catalyst potential, and pointing out that the second-quarter earnings growth of the S&P 500 index may exceed expectations. The strategy team led by Michelle Weaver analyzed that the market generally expects the S&P 500 index's second-quarter earnings per share to grow by 5% year-on-year, with revenue growth exceeding 4%, but actual growth may be stronger. The net profit of the top seven technology giants is expected to grow by 14% year-on-year, while the remaining 493 constituent stocks may decline by 3%. Although analysts lowered earnings per share expectations from April to May, the earnings revision has rebounded from -25% to around 1%, and index earnings are expected to exceed expectations this quarter, roughly in line with the historical average of 4%-5% above expectations. In terms of specific recommendations, Morgan Stanley is positive on 13 stocks: argenx SE (ARGX.US) is attracting attention for undervalued research pipeline value, with a target price of $700. Atlassian (TEAM.US) has a target price of $320 due to its potential for sustained revenue growth of over 20% and expected margin expansion. Chewy (CHWY.US) is expected to maintain or exceed first-quarter revenue levels due to marketing and product optimization, with a target price of $50. With a target price of $80, CVS Health Corporation benefits from competitor store closures, customer traffic advantages, and pharmacy benefit management business growth. DraftKings (DKNG.US) may see a profitability turning point in the second quarter, with actual licensee rate increases offsetting tax and regulatory pressures, with a target price of $52. Eaton Corp. Plc (ETN.US) benefits from improved profit margins in the U.S. electrical business, with a target price of $375. Eli Lilly (LLY.US) with core products Mounjaro and Zepbound contributing $8.2 billion in revenue in the second quarter. Earnings exceeding expectations may lead to an upward revision of guidance for 2025, with a target price of $1135. F5 (FFIV.US) is viewed favorably due to growth in demand for cloud and load balancing products, with a target price of $305. NVIDIA Corporation (NVDA.US) is supported by strong end demand and accelerated shipments of rack-level products, with a target price of $170. Omada Health (OMDA.US) achieves operational leverage through technology enhancement and multi-disease sales, with a target price of $25. Southwest Airlines Co. (LUV.US) may see a rebound in stock price if internal guidance is met and limited impact on baggage fees is confirmed, with a target price of $38. Valley National Bancorp (VLY.US) is expected to see a 3% increase in net interest income, with a target price of $11. Western Digital Corporation (WDC.US) is undervalued in terms of prospects for margin expansion, with a target price of $85. At the same time, the strategy team is cautious about two stocks: National Storage Affiliates Trust (NSA.US) has a target price of $30 due to FFO expectations below market and company guidance. Teradyne, Inc. (TER.US) has revenue and earnings forecasts for the 2026 fiscal year that are 7% and 14% lower than Wall Street expectations, with a target price of $74. In summary, Morgan Stanley's recommendations combine company fundamentals, industry trends, and market sentiment, providing investors with diversified choices. However, potential risks such as trade policies, changes in consumer spending, and the sustainability of corporate earnings should be considered.