With the end of the second quarter approaching, where are analysts most optimistic and pessimistic in terms of their ratings on stocks in the S&P 500? How have their ratings changed given the impact of COVID-19?
Overall, there are 10,382 ratings on stocks in the S&P 500. Of these 10,382 ratings, 52.1% are Buy ratings, 41.6% are Hold ratings, and 6.3% are Sell ratings.
At the sector level, analysts are most optimistic on the Energy (62%) and Health Care (61%) sectors, as these two sectors have the highest percentages of Buy ratings of all 11 sectors. However, the Energy sector is also projected to report the largest earnings decline of all 11 sectors in CY 2020 (-107.6%). On the other hand, analysts are most pessimistic on the Consumer Staples (43%) and Financials (45%) sectors, as these two sectors have the lowest percentages of Buy ratings. The Consumer Staples sector also has the highest percentage of Sell ratings (10%), while the Financials sector also has the highest percentage of Hold ratings (48%).
Insight/2020/06.2020/06.19.2020_EI/S%26P%20500%20Percentage%20of%20Buy%20Hold%20and%20Sell%20Ratings.png)
Despite the negative impact on numerous businesses due to the lockdowns caused by COVID-19, the percentage of Buy ratings on S&P 500 stocks has actually increased since the start of the year. On January 3, just over half of all ratings on S&P 500 stocks (50.6%) were Buy ratings. As stock prices and target prices fell in February and March, analysts increased their Buy ratings on S&P 500 stocks, with the percentage peaking at over 54% in early April. As stock prices and target prices have increased over the last few months, the percentage of Buy ratings has dipped slightly. Despite the small decrease, the percentage of Buy ratings on S&P 500 stocks today (52.1%) is above the percentage back on January 3 (50.6%) prior to the lockdowns caused by COVID-19.
Insight/2020/06.2020/06.19.2020_EI/S%26P%20500%20Buy%20Ratings%20Target%20Price%20and%20Closing%20Price%20YTD.png)
However, there has been little change at the sector level in terms of ranking by Buy ratings. The same four sectors that had the highest percentages of Buy ratings at the start of the year also have the highest percentages of Buy ratings today. Three of the four sectors that had the lowest percentages of Buy ratings at the start of the year also have the lowest percentages of Buy ratings today. The Utilities sector is the only sector that has witnessed a significant change in terms of its ranking by Buy ratings (to sixth highest from tenth highest) since the start of the year, as the percentage of Buy ratings in this sector has increased to 51% from 42% during this period.
Month-End S&P 500 Sector Buy Ratings % (Source: FactSet)
|
Sector
|
Dec-19
|
Jan-20
|
Feb-20
|
Mar-20
|
Apr-20
|
May-20
|
Jun-20
|
|
Communication Services
|
60%
|
59%
|
61%
|
62%
|
60%
|
58%
|
58%
|
|
Consumer Discretionary
|
48%
|
48%
|
48%
|
50%
|
49%
|
50%
|
49%
|
|
Consumer Staples
|
39%
|
38%
|
38%
|
44%
|
43%
|
43%
|
43%
|
|
Energy
|
66%
|
66%
|
67%
|
66%
|
63%
|
62%
|
62%
|
|
Financials
|
43%
|
42%
|
42%
|
46%
|
45%
|
45%
|
45%
|
|
Health Care
|
59%
|
59%
|
59%
|
62%
|
60%
|
60%
|
61%
|
|
Industrials
|
46%
|
46%
|
47%
|
50%
|
48%
|
49%
|
48%
|
|
Information Technology
|
53%
|
54%
|
55%
|
59%
|
56%
|
56%
|
56%
|
|
Materials
|
50%
|
50%
|
49%
|
55%
|
53%
|
52%
|
52%
|
|
Real Estate
|
44%
|
44%
|
46%
|
49%
|
47%
|
47%
|
48%
|
|
Utilities
|
42%
|
42%
|
43%
|
50%
|
48%
|
50%
|
51%
|
|
S&P 500
|
51%
|
50%
|
51%
|
54%
|
52%
|
52%
|
52%
|
Highest % of Buy Ratings in S&P 500: Top 10 (Source: FactSet)
|
Company
|
Buy
|
Hold
|
Sell
|
|
Quanta Services, Inc.
|
100%
|
0%
|
0%
|
|
Assurant, Inc.
|
100%
|
0%
|
0%
|
|
L3Harris Technologies Inc
|
95%
|
5%
|
0%
|
|
Intercontinental Exchange, Inc.
|
95%
|
5%
|
0%
|
|
Jacobs Engineering Group Inc.
|
94%
|
6%
|
0%
|
|
Synopsys, Inc.
|
93%
|
0%
|
7%
|
|
Cigna Corporation
|
92%
|
8%
|
0%
|
|
Amazon.com, Inc.
|
92%
|
6%
|
2%
|
|
Diamondback Energy, Inc.
|
92%
|
8%
|
0%
|
|
Alphabet Inc. Class A
|
91%
|
9%
|
0%
|
Highest % of Sell Ratings in S&P 500: Top 10 (Source: FactSet)
|
Company
|
Buy
|
Hold
|
Sell
|
|
McCormick & Company, Incorporated
|
15%
|
38%
|
46%
|
|
American Airlines Group, Inc.
|
20%
|
35%
|
45%
|
|
CenturyLink, Inc.
|
19%
|
38%
|
44%
|
|
Consolidated Edison, Inc.
|
18%
|
41%
|
41%
|
|
Waters Corporation
|
0%
|
60%
|
40%
|
|
Franklin Resources, Inc.
|
0%
|
62%
|
38%
|
|
News Corporation Class A
|
38%
|
25%
|
38%
|
|
Western Union Company
|
5%
|
62%
|
33%
|
|
ResMed Inc.
|
44%
|
22%
|
33%
|
|
Clorox Company
|
20%
|
47%
|
33%
|
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