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Analysts Continue to Have An Unusually High Number of “Buy” Ratings on S&P 500 Stocks

Earnings

By John Butters  |  June 17, 2022

Despite higher inflation, rising interest rates, military conflict in Ukraine, fear of recession, and stock price declines, analysts continue to have an unusually high number of Buy ratings on stocks in the S&P 500.

As of today, there are 10,708 ratings on stocks in the S&P 500. Of these ratings, 56.9% are Buy ratings, 37.7% are Hold ratings, and 5.4% are Sell ratings. The five-year average (month-end) percentage of Buy ratings is 53.3%, the five-year average (month-end) percentage of Hold ratings is 40.7%, and the five-year average (month-end) percentage of Sell ratings is 5.5%.

sp-500-ratings-percent-monthly-2010-2022

The percentage of Buy ratings has declined slightly in recent months from a peak of 57.4% at the end of February to 56.9% today. However, assuming the percentage of Buy ratings does not dip below 56% in the next two weeks, the month of June will mark the 15th straight month in which the percentage of Buy ratings on S&P 500 stocks finishes above 56%. Prior to this recent surge in Buy ratings, the last time the (month-end) percentage of Buy ratings exceeded 55% was September 2011 (55.8%).

Sector Analysis

At the sector level, analysts are most optimistic on the Information Technology (65%), Energy (64%), and Communication Services (61%) sectors, as these three sectors have the highest percentages of Buy ratings. On the other hand, analysts are most pessimistic on the Consumer Staples (39%) sector, as this sector has the lowest percentages of Buy ratings. The Consumer Staples sector also has the highest percentage of Hold ratings (49%) and the highest percentage of Sell ratings (12%).

sp-500-percentage-buy-hold-sell-ratings-sectors

The S&P 500 companies with the highest percentages of Buy and Sell ratings are listed in the tables below.

Highest % of Buy Ratings in S&P 500: Top 10 (Source: FactSet)

Company

Buy

Hold

Sell

Signature Bank

100%

0%

0%

Alexandria Real Estate Equities, Inc.

100%

0%

0%

Assurant, Inc.

100%

0%

0%

Alphabet Inc. Class A

98%

2%

0%

Alphabet Inc. Class C

98%

2%

0%

Microsoft Corporation

95%

5%

0%

S&P Global, Inc.

95%

5%

0%

IQVIA Holdings Inc

95%

5%

0%

VICI Properties Inc

95%

5%

0%

T-Mobile US, Inc.

94%

3%

3%

Highest % of Sell Ratings in S&P 500: Top 10 (Source: FactSet)

Company

Buy

Hold

Sell

Pinnacle West Capital Corporation

13%

20%

67%

Consolidated Edison, Inc.

6%

39%

56%

Clorox Company

16%

32%

53%

Lumen Technologies, Inc.

15%

38%

46%

Snap-on Incorporated

27%

36%

36%

Robert Half International Inc.

36%

29%

36%

Vornado Realty Trust

14%

50%

36%

Progressive Corporation

24%

43%

33%

Church & Dwight Co., Inc.

18%

50%

32%

McCormick & Company, Incorporated

8%

62%

31%

What is driving the optimistic outlook in terms of ratings? One possible reason is that analysts have continued to increase earnings estimates for S&P 500 companies in aggregate for CY 2022 and CY 2023 in recent months.

Listen to Earnings Insight on the go! In our weekly Earnings Insight podcast, John Butters provides an update on S&P 500 corporate earnings and related topics based on his popular Earnings Insight publication. The podcast is made available every Monday—listen on Apple podcasts, Spotify, or factset.com.

This blog post is for informational purposes only. The information contained in this blog post is not legal, tax, or investment advice. FactSet does not endorse or recommend any investments and assumes no liability for any consequence relating directly or indirectly to any action or inaction taken based on the information contained in this article.

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John Butters

Vice President, Senior Earnings Analyst

Mr. John Butters is Vice President and Senior Earnings Analyst at FactSet. His weekly research report, “Earnings Insight,” provides analysis and commentary on trends in corporate earnings data for the S&P 500 including revisions to estimates, year-over-year growth, performance relative to expectations, and valuations. He is a widely used source for the media and has appeared on CNBC, Fox Business News, and the Business News Network. In addition, he has been cited by numerous print and online publications such as The Wall Street Journal, The Financial Times, The New York Times, MarketWatch, and Yahoo! Finance. Mr. Butters has over 15 years of experience in the financial services industry. Prior to FactSet in January 2011, he worked for more than 10 years at Thomson Reuters (Thomson Financial), most recently as Director of U.S. Earnings Research (2007-2010).

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The information contained in this article is not investment advice. FactSet does not endorse or recommend any investments and assumes no liability for any consequence relating directly or indirectly to any action or inaction taken based on the information contained in this article.