Cantor Fitzgerald

Marc Pado Comments: Whispers Drive Great Earnings Expectations - Reuters.com

Reuters.com, October 22, 2009

"Whisper numbers" - unofficial corporate earnings forecasts usually higher than professional analyst estimates -- are becoming a major market-moving factor as U.S. third quarter earnings enter full swing. While the credibility of these numbers is disputed -- they are often used by traders to talk up their own positions -- their influence is not in question. After two prior earnings periods focused on corporate cost-cutting and damage control, investors are eager for topline growth following a recent explosive rally in stocks.

So for third-quarter earnings, Wall Street prefers the lofty numbers of market chatter over the more conservative estimates of companies and analysts. "Investors have high expectations now and they are not going to just believe the official projections given out, and that's why whisper numbers are playing such a big part in the third quarter earnings," said Marc Pado, U.S. market strategist at Cantor Fitzgerald & Co in San Francisco. As investors react to quarterly reports with these figures in mind, some companies have seen shares fall despite posting profits that were better than market consensus. Take Goldman Sachs Group (GS.N). Its shares dipped last week after third-quarter net income rose to $5.25 a share. That handily beat the forecast reported by Thomson Reuters I/B/E/S of $4.24 a share but fell short of whisper numbers placed as high as $6.00 per share.