Several stocks are poised to rally as companies continue reporting third-quarter earnings over the next few weeks, according to Morgan Stanley. Big banks and others that have so far reported results largely booked better-than-expected revenue and earnings-per-share for the three months ended September 30. Since the earnings season got underway, more than 80% of companies that have so far reported have beaten Wall Street’s estimates, FactSet data shows. “The dearth of downward earnings revisions in the run-up into 3Q earnings suggests companies are already comfortable they can meet or beat expectations,” Morgan Stanley analysts led by Michelle Weaver wrote Tuesday in a note to clients. “Interestingly, stock-specific risk has risen sharply and sits at its highest level since 2020, suggesting a good environment for stock-picking as we enter the peak of the reporting season,” the analysts added. Morgan Stanley highlighted several stocks that could see sharp gains as earnings season ramps up. Its top picks are in a wide range of industries, from software to social media to airlines. Here are three of Morgan Stanley’s top picks: Atlassian The software company’s stock is likely to rise amid growing demand for its app development tools, according to Morgan Stanley. In addition, Atlassian announced last month its shift to the cloud by 2029 — a move that should improve the firm’s ability to monetize its expanding solution set, the bank’s analysts said. Morgan Stanley has an overweight rating on Atlassian and a price target of $320 per share. Atlassian is down more than 14% over the past three months. Shares have fallen roughly 31% since the beginning of this year. Meta Platforms The social media company’s shares have room to run thanks to growth in its user engagement and advertising business , according to the Morgan Stanley analysts. Meta is also likely to expand as it integrates several Graphics Processing Unit-enabled improvements into its family of apps, including Instagram. Morgan Stanley has an overweight rating on Meta and a $850 price target on its shares. The WhatsApp parent has risen about 25% in 2025. Southwest Airlines Southwest’s shares have a lot of room to run as the airline continues to overhaul its business and as Wall Street continues to sleep on the stock. “Despite/because of the stock performance, investor sentiment remains tactically cautious which could push the stock even higher in the event of a beat + strong call/guide,” the investment bank’s analysts wrote in their note. Since September 2024, Southwest has undertaken efforts to improve its operational efficiencies by reducing turn times and introducing red-eye flights to increase aircraft utilization, in addition to implementing several cost cutting measures . Morgan Stanley’s price target for the airline stock is $38 per share. Southwest Airlines shares have risen almost 15% over the past year.
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