Where Are Analysts Most Optimistic on Ratings for S&P 500 Companies for Q4 2020?

Earnings

By John Butters | September 18, 2020

With the end of the third quarter approaching, where are analysts most optimistic and pessimistic in terms of their ratings on stocks in the S&P 500 heading into the fourth quarter?

Overall, there are 10,256 ratings on stocks in the S&P 500. Of these 10,256 ratings, 52.8% are Buy ratings, 40.6% are Hold ratings, and 6.6% are Sell ratings. Over the past five years, the average (month-end) percentage of Buy ratings is 51.0%, the average (month-end) percentage of Hold ratings is 43.2%, and the average (month-end) percentage of Sell ratings is 5.8%.

At the sector level, analysts are most optimistic on the Health Care (62%), Energy (61%), and Communication Services (59%) sectors, as these three sectors have the highest percentages of Buy ratings. On the other hand, analysts are most pessimistic on the Financials (46%), Consumer Staples (46%), and Real Estate (47%) sectors, as these three sectors have the lowest percentages of Buy ratings. The Financials sector has the highest percentage of Hold ratings (47%), while the Consumer Staples sector has the highest percentage of Sell ratings (10%).

S&P 500 Percentage of Buy Hold Sell Ratings

It is interesting to note that analysts are more optimistic on S&P 500 stocks today compared to the start of the year (before the impact of COVID-19), based on the percentage of Buy ratings on S&P 500 stocks. On December 31, 50.6% of ratings on S&P 500 stocks were Buy ratings, compared to 52.8% today.

Three sectors have seen significant changes in their percentages of Buy ratings since the start of the year. The Consumer Staples (to 46% from 39%) and Utilities (to 49% from 42%) sectors have seen significant increases in their percentages of Buy ratings, while the Energy sector (to 61% from 66%) has seen a significant decrease in its percentage of Buy ratings.

However, there has been little change at the sector level in terms of ranking by Buy ratings. The same four sectors (Energy, Health Care, Communication Services, and Information Technology) that had the highest percentages of Buy ratings at the start of the year (before COVID-19) also have the highest percentages of Buy ratings today. Three of the four sectors (Consumer Staples, Financials, and Real Estate) that had the lowest percentages of Buy ratings at the start of the year also have the lowest percentages of Buy ratings today.

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	Jul-20	Aug-20	Sep-20
Health Care	59%	59%	59%	62%	60%	60%	61%	61%	61%	62%
Energy	66%	66%	67%	66%	63%	62%	62%	62%	61%	61%
Communication Services	60%	59%	61%	62%	60%	58%	59%	58%	59%	59%
Information Technology	53%	54%	55%	59%	56%	56%	56%	56%	56%	56%
S&P 500	51%	50%	51%	54%	52%	52%	53%	53%	52%	53%
Materials	50%	50%	49%	55%	53%	52%	52%	53%	52%	52%
Consumer Discretionary	48%	48%	48%	50%	49%	50%	50%	50%	50%	50%
Utilities	42%	42%	43%	50%	48%	50%	52%	50%	48%	49%
Industrials	46%	46%	47%	50%	48%	49%	48%	49%	49%	49%
Real Estate	44%	44%	46%	49%	47%	47%	48%	47%	47%	47%
Consumer Staples	39%	38%	38%	44%	43%	43%	44%	45%	46%	46%
Financials	43%	42%	42%	46%	45%	45%	46%	46%	45%	46%

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%
Teledyne Technologies Incorporated	100%	0%	0%
L3Harris Technologies Inc	95%	5%	0%
Phillips 66	95%	5%	0%
Centene Corporation	95%	5%	0%
Pioneer Natural Resources Company	94%	6%	0%
Jacobs Engineering Group Inc.	94%	6%	0%
Synopsys, Inc.	93%	0%	7%
Keysight Technologies Inc	92%	8%	0%

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

Company	Buy	Hold	Sell
American Airlines Group, Inc.	20%	35%	45%
CenturyLink, Inc.	13%	44%	44%
Franklin Resources, Inc.	0%	57%	43%
WEC Energy Group Inc	20%	40%	40%
Waters Corporation	0%	63%	38%
Omnicom Group Inc	21%	43%	36%
Expeditors International of Washington	7%	57%	36%
Brown-Forman Corporation Class B	6%	61%	33%
ResMed Inc.	22%	44%	33%
McCormick & Company, Incorporated	17%	50%	33%

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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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Where Are Analysts Most Optimistic on Ratings for S&P 500 Companies for Q4 2020?

Earnings

Month-End S&P 500 Sector Buy Ratings % (Source: FactSet)

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

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

John Butters

Vice President, Senior Earnings Analyst

Comments

Where Are Analysts Most Optimistic on Ratings for S&P 500 Companies for Q4 2020?

Earnings

Month-End S&P 500 Sector Buy Ratings % (Source: FactSet)

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

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

John Butters

Vice President, Senior Earnings Analyst

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