Eight stocks are attractive and can rally after they report earnings soon, Morgan Stanley says

Morgan Stanley expects several names to rally after upcoming earnings, citing upside potential from strong operating trends and favorable commentary. Affirm is seen benefiting from better-than-expected gross merchandise volume and potentially raised margin/EPS targets, while Old Dominion Freight Line is expected to offer positive forward guidance and Walmart is projected to post stronger U.S. comparable sales and operating income growth. The article is largely an analyst preview rather than a direct earnings release, so the likely market impact is moderate and stock-specific.

Analysis

The setup is less about "beating" numbers and more about whether management teams can convert demand resilience into a higher valuation multiple. In this tape, upside is most likely to come from companies that can upgrade forward guidance rather than simply clear the quarter, because the market has already rewarded quality balance sheets and punished any sign of decelerating operating leverage. That makes the asymmetry in the trio very different: the transportation name has the cleanest near-term earnings torque, the retailer has the most durable comp support, and the fintech name has the most room for narrative re-rating if its unit economics improve in tandem.

Second-order effects matter here. If the freight carrier confirms pricing discipline and volume normalization, it is a read-through for broader industrial restocking and a mild positive for domestic trucking capacity names, but a negative for shippers and retailers that have been benefiting from softer transport costs. If the retailer prints strong U.S. comps, the signal is more important for supplier mix and margin mix than for top-line alone: vendors with exposure to discretionary household spend and private label could see better order flow, while low-end apparel and general merchandise peers may have to spend harder to defend traffic. For the fintech name, the real issue is not gross merchandise volume in isolation but whether improving take-rate and loss performance can support a cleaner EPS path into investor day; that is what would unlock multiple expansion.

The contrarian read is that consensus may be too comfortable with "good enough" guidance already embedded in these names. After strong year-to-date moves in two of the three, the bar for post-earnings upside is now more about tone and revision velocity than headline beats, so even a small miss on forward commentary could trigger an outsized de-rating over 1-3 sessions. The most attractive risk/reward is therefore in structures that benefit from a positive guide-up but cap downside if the market simply shrugs at the print.

Key Decisions for Investors

• Buy AFRM into the print with a 2-4 week horizon via calls or a call spread; best case is a guide-up plus investor-day re-rating, but size it small because the stock needs both execution and better sentiment to work.
• Go long ODFL on a post-earnings confirmation of pricing and margin leverage; use as a 1-2 quarter relative-value long versus weaker freight/logistics peers, since the catalyst is guidance quality more than the quarter itself.
• Hold WMT for event-driven upside, but prefer selling downside puts or using a call spread into the release; the cleaner trade is on continued comp/margin compounding rather than chasing outright delta after the year-to-date move.
• Pair long ODFL / short a lower-quality trucking or parcel peer over the next 1-3 months if management sounds constructive on demand; the cleaner operator should capture any industry multiple expansion first.
• If AFRM gaps up sharply on the print, take profits quickly on half the position and leave the rest for investor day; the second leg of upside requires guidance confirmation, not just a beat.