Bank of America says these stocks are a buy heading into earnings

Bank of America highlighted multiple buy-rated names into upcoming quarterly reports, led by Spotify where analysts expect 2Q26 results to show stable KPIs with reported revenue growth accelerating as FX headwinds moderate; Spotify shares are up 5% this month. Ahead of IBM’s earnings, a Bank of America-led bullish stance was reinforced by a target increase to $330 (from $315) with upside tied to faster Confluent synergies; IBM shares are up 3.3% this month. For Deutsche Bank, the outlook is softer with net profit down 2% YoY despite 4% revenue growth, but the firm raised its price target to $39 (from $38); the stock is up 8% this year, while IHG and Grab received positive framing around resilient models and cash-flow/profitability levers.

Analysis

The cleanest pre-earnings setup is IBM: the market is paying for visible mix shift and cost discipline, but the real upside is that software synergies can force estimate revisions faster than consensus expects. If management delivers only “in-line” revenue and FCF guidance, the rerating likely stalls; if FCF is raised without a corresponding margin sacrifice, that is the kind of print that supports another 5-10% move in a week.

IHG sits in the same quality bucket but is a slower-burn multiple story: asset-light cash conversion and buybacks matter more than near-term EPS beats. That makes it a relative winner versus capital-intensive travel names and any operator needing heavy reinvestment; the risk is that investors overpay for defensiveness if forward booking data soften, turning “resilient” into just “expensive.”

SPOT and GRAB are execution trades, not just beats. For SPOT, the next 1-2 quarters still hinge on monetization evidence, not the AI tier narrative; stable KPIs are enough to avoid derating, but not enough to justify a big multiple expansion unless ad yield and premium conversion visibly improve. GRAB’s moat is real, but the market will quickly punish any sign that profitability is being bought with subsidy creep rather than genuine operating leverage.

DB is the most interesting contrarian rerating candidate because the setup is intentionally soft; banks can still outperform on relative valuation even when the quarter looks mediocre if costs are framed as investment rather than leakage. The main falsifier is continued expense drift without a clear IB or deposit offset. Consensus may be missing how much of the visible good news is already in these pre-earnings moves, making IBM/IHG the cleaner longs and SPOT the name most exposed to a good-not-great print.

Key Decisions for Investors

• Long IBM into earnings; use the print to own FCF revision risk. Falsify if revenue/FCF guide is not raised or if the Confluent synergy story sounds deferred.
• Long IHG as a defensive cash-return compounder over the next 1-3 months; best risk/reward if travel demand stays stable. Cut if booking/trend commentary weakens or capital-return cadence slows.
• Wait on SPOT until the report: buy a 1-2 month call spread only if management quantifies AI-tier monetization and ad/ARPU acceleration. Fade the pre-earnings strength if KPIs are merely stable rather than improving.
• Speculative long DB for a 3-6 month rerating, but only if management frames higher costs as investment with clear revenue offsets. Exit on another quarter of expense growth outpacing revenue.
• GRAB is a watchlist long, not a chase: buy only if mobility/delivery margins expand without promo re-acceleration. If CAC or incentives rise again, the super-app premium should compress.