Beware if you hold these stocks heading into earnings season, Piper Sandler says

Earnings season is right around the corner, and there are some stocks investors should be wary of, according to Piper Sandler. The season unofficially kicks off this week, with JPMorgan’s third-quarter results due Friday before the bell, and it ramps up from there. This comes as October has already been a volatile month for stocks – on par with historical trends , especially during election years. In those years, the index has seen an average decline for October of nearly 1%, per the Stock Trader’s Almanac. The S & P 500 fell about that much on Monday but then recovered during Tuesday’s session, seeing gains of nearly 1%. September was even more notable. The S & P 500 – along with the Dow Jones Industrial Average – posted its fifth consecutive winning month, and the Federal Reserve cut interest rates for the first time since 2020 , doing so by a half point. Against this backdrop, Piper Sandler screened for names that are most at risk of missing third-quarter expectations this season in its view. The investment firm looked for stocks that have a history of missing EPS estimates and a higher dispersion in analyst estimates, so there’s a lot of uncertainty around the results. Plus, the stocks have a high correlation to the Purchasing Managers’ Indexes, therefore they are highly cyclical at a time when the economy has been in a bit of a lull. Below are some names on the list. Paramount Global made the list ahead of its quarterly results, which are projected to be reported on the last day of this month. While shares have risen 4% in the past one month, they’ve fallen around 29% in 2024 in what has been a tumultuous year for the company. Following failed merger talks with Warner Bros. Discovery , Paramount’s fell about 5% on July 8 after it finally agreed to merge with Skydance just days after deal talks were reignited . Ahead of its planned merger, Paramount began its second phase of planned layoffs in the U.S. late last month as part of its efforts to reduce annual costs by $500 million. That said, Wall Street is mixed on the name. Of the 27 analysts covering the stock, 13 have taken a neutral stance and 10 have an underperform or sell rating, according to LSEG. The remaining four have a strong buy or buy rating. Nordstrom is also on the list. The department store chain is set to report its quarterly results in November. Unlike Paramount, shares have actually risen this year, advancing more than 19%. In early September, the company’s founding family announced that it’s offered to take the chain private for $23 per share. That would value Nordstrom at around $3.8 billion. In the past one month, the stock has fallen more than 3%. The Street is largely neutral on the name, with 13 of the 19 analysts covering it having a hold rating, per LSEG. By contrast, only two have a strong buy or buy rating. In September, when issuing its latest earnings results, GameStop – which made the cut on Piper Sandler’s list as well – posted a significant sales decline compared to the year-ago period. Although the stock has soared 91% in the past six months, it’s moved more than 13% lower in the past one month. Quarterly results for the company are due in December. GME 6M mountain GME, 6-months On the other hand, Southwest Airlines – another name on Piper’s “at risk” list – has made notable changes to its business model to boost profits ahead of its quarterly results due later this month. Those updates include extra legroom seats beginning in 2026 and assigned seating. In September, the airline raised its third-quarter revenue forecast and authorized $2.5 billion in share buybacks. Year to date, shares of Southwest have jumped more than 6%.