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%).
Insight/2020/09.2020/09.18.2020_EI/S%26P%20500%20Percentage%20of%20Buy%20Hold%20Sell%20Ratings.png)
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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