Analysts are expecting weaker profit growth in the months ahead for U.S. firms.

National Bank Financial reports that with 75% of the S&P 500 companies having already reported their fourth quarter profits, earnings growth is expected to reach 10.9%. “Should growth remain above 10%, this will be the 14th consecutive quarter of double-digit earnings growth – a record,” it notes.

“However, the expectations for upcoming quarters are a source of concern,” NBF cautions. “Among companies that have given guidance on future earnings, a large number issued profit warnings. At 4.1, the ratio of negative to positive pre-announcements is the highest since the third quarter of 2001, which corresponds to the latter part of the latest U.S. recession.”

NBF says that it does not foresee a full-fledged recession, but it does view the widespread profit warnings as evidence of an economic slowdown. “Yet, at this point, it appears that analysts remain reluctant to integrate softer economic growth in their earnings expectations. Indeed, the number of upward earnings revisions for companies listed on the S&P500 remains almost equal to the number of downward revisions,” it concludes. “In our opinion, we could witness significant downward earnings revisions in the coming months, which would evidently sit ill with the investment community.”

BCA Research allows that U.S. profit growth will slow further in coming months, but says that it should revive in the second half of 2007. “Further downgrades seem likely given recent corporate guidance. Indeed, our Profit Model warns that earnings growth could dip into the low single-digits around mid-year,” BCA says in a research note. “In the near term this poses a risk to the equity market, which has become accustomed to strong profit growth and steady positive surprises.”

“However, our Model signals that profit growth should begin to rebound in the second half, driven by an acceleration in top-line growth,” it concludes. “The slowdown in U.S. profit growth should be short-lived, underpinning our upbeat stance on stocks on a six to 12 month horizon.”