The depth of this year’s retreat has taken many Wall Street strategists and analysts on guard, and it may not stop until they catch on. In a note to customers on Monday, Jefferies strategist Sean Darby highlighted the latest wave of price-cutting cuts from Wall Street analysts. “If we travel at warp speed through the current interest rate cycle, then we are moving at light speed through the earnings momentum clock. Sales side analysts are increasingly cutting target prices, pushing more companies into the fallen angels quadrant that generally guarantees they are thrown away. from portfolios before the knife finally cuts the target price, “wrote Darby. Banks and semiconductors are some of the sectors that have slipped into the “fallen angel”[ads1]; quadrant, according to Jefferies. However, these price target cuts have so far largely been a matter of analysts lowering multiples for their stocks. Earnings estimates have remained broadly stable, although there is growing concern about a recession in the US at some point over the next 12 months. Until analysts begin to take into account the downside and lower earnings estimates, it is unlikely that equities have bottomed out yet, Darby said. “Our analysis suggests that despite investor sentiment surveys being quite bearish, it has not been the noisy sales that would have accompanied a market bottom. If we are right, the last part of the earnings momentum cycle is a combination of both earnings cuts and part of target prices. “Investors should be conservatively positioned,” Darby wrote. That process has started, but so far. Since March 31, analysts have cut their second-quarter earnings per share for S&P 500 companies by just 1%, according to a note from FactSet’s John Butters on Friday. Meanwhile, the current net profit margin estimate for the calendar year 2022 is 12.6% for S&P 500 companies, according to Butters. On March 31, this figure was 12.7%. – CNBC’s Michael Bloom contributed to this report.