Week Ahead Preview: 2H Revisions & Backlog Conversion

Research evidence excerpt

Week Ahead Preview: 2H Revisions & Backlog Conversion

Idea

July 27, 2026 11:56 AM GMT

Morgan Stanley & Co. LLCMMulti-Industry | North America Christopher Snyder, CFA

Equity Analyst

Week Ahead Preview: 2H Chris.Snyder@morganstanley.comBrandon Knutson +1 212 761-4470

Brandon.Knutson@morganstanley.com +1 212 761-4168

Revisions & Backlog Conversion Toby Okwara

Toby.Okwara@morganstanley.com +1 212 761-1693

The first week of Q2 EPS matched the core pillars of our Christine Yao

preview; our US multi-industry is delivering broad Q2 upside ResearchChristine.Yao@morganstanley.comAssociate +1 212 761-4193

against a conservative bar, but beats are anticipated, and the

Multi-Industry

equities are trading on 2H revisions North America

Industry View Attractive

Exhibit 1: Our US multi-industry coverage is driving broad Q2 beats against

conservative guides, but the group is trading at 2H revisions, as anticipated in our

preview. With US Industrials trading at historically premium valuations, we believe

positive forward revisions are needed to drive further equity upside & that is what

drives our stock selection into Q2 EPS

Source: Morgan Stanley Research, Company Reports, Factset

The first week of Q2 EPS matched the core pillars of our preview (Following 2H

Volumes) – our US Industrial coverage is delivering broad Q2 organic + EPS

upside, but this is anticipated by the market, and the equities are trading on 2H

revisions. Our US multi-industry coverage has rerated to a near 2 SDEV valuation

premium vs history as the market better appreciates the improved cyclical set-up

that we called for in our 2026 outlook (Layering in Cyclical Torque) - elevated

multiples tell us that positive revisions are anticipated by the market & needed

to drive further equity upside (link).