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Where Are Analysts Most Optimistic on Ratings for S&P 500 Companies Heading into Q2 2021?

Earnings

By John Butters  |  March 19, 2021

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

Overall, there are 10,374 ratings on stocks in the S&P 500. Of these 10,374 ratings, 54.9% are Buy ratings, 38.2% are Hold ratings, and 6.9% are Sell ratings. Over the past five years, the average (month-end) percentage of Buy ratings is 51.3%, the average (month-end) percentage of Hold ratings is 42.7%, and the average (month-end) percentage of Sell ratings is 5.9%.

S&P 500 Percentage of Buy Hold and Sell Ratings

At the sector level, analysts are most optimistic on the Health Care (61%), Information Technology (61%), and Energy (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 (44%), Real Estate (47%) and Financials (49%) sectors, as these three sectors have the lowest percentages of Buy ratings. The Consumer Staples and Real Estate sectors are also tied for the highest percentage of Hold ratings (46%), while the Consumer Staples and Communication Services sectors are tied for the highest percentage of Sell ratings (10%).

At the company level, the 10 companies (with a minimum of three ratings) in the S&P 500 with the highest percentages of Buy ratings and Sell ratings can be found in the tables below.

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

Company

Buy

Hold

Sell

Teledyne Technologies Incorporated

100%

0%

0%

Assurant, Inc.

100%

0%

0%

Amazon.com, Inc.

96%

4%

0%

Microsoft Corporation

94%

6%

0%

Alphabet Inc. Class A

93%

7%

0%

Alphabet Inc. Class C

93%

7%

0%

Cigna Corporation

92%

8%

0%

Alexandria Real Estate Equities, Inc.

92%

8%

0%

Teleflex Incorporated

92%

0%

8%

Howmet Aerospace Inc.

91%

9%

0%

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

Company

Buy

Hold

Sell

Xerox Holdings Corporation

0%

38%

63%

Lumen Technologies, Inc.

20%

27%

53%

American Airlines Group, Inc.

10%

38%

52%

Consolidated Edison, Inc.

6%

47%

47%

ViacomCBS Inc. Class B

14%

45%

41%

Franklin Resources, Inc.

7%

53%

40%

Expeditors International of Washington

7%

53%

40%

Northern Trust Corporation

33%

28%

39%

Robert Half International Inc.

38%

23%

38%

Brown-Forman Corporation Class B

6%

59%

35%

At this time last year, COVID-19 began to spread across the country, and many industries were forced to reduce capacity or close entirely due to social distancing policies implemented to help reduce the spread of the virus. As of today, many of these policies that constricted economic activity have been loosened or eased as vaccinations increase across the country. How have ratings for the S&P 500 at the sector level changed since March of 2020? How did the sectors with the highest and lowest percentages of Buy ratings at this time last year perform in terms of price return during this period?

It is interesting to note that there is little difference in the overall percentage of Buy ratings on stocks in the S&P 500 between now and the end of March 2020. On March 31 (2020), 54.1% of ratings on S&P 500 stocks were Buy ratings, compared to 54.9% today.

S&P 500 Buy Ratings Today vs 03312020

Five sectors have seen significant changes in their percentages of Buy ratings since March 2020. The Consumer Discretionary (to 55% from 50%), Utilities (to 54% from 50%), and Financials (to 49% from 46%) sectors have seen the largest increases in their percentages of Buy ratings during this time, while the Energy sector (to 61% from 66%) and Communication Services (to 58% from 62%) sectors have seen the largest decreases in their percentages of Buy ratings.

However, there has been little change at the sector level in terms of ranking by Buy ratings since March 2020. The same four sectors (Health Care, Information Technology, Energy, and Communication Services) that had the highest percentages of Buy ratings at the end of March 2020 also have the highest percentages of Buy ratings today. The same three sectors (Consumer Staples, Financials, and Real Estate) that had the lowest percentages of Buy ratings on March 31, 2020 also have the lowest percentages of Buy ratings today.

How accurate were the sector-level Buy ratings on March 31, 2020 in terms of predicting price performance almost one year later? Overall, the price of the S&P 500 has increased by 51% since March 31, 2020 (to 3915.46 from 2584.59). The four sectors that have seen the largest price increases during the period are the Materials (+73%), Consumer Discretionary (+66%), Financials (+66%), and Energy (+66%) sectors. Of these four sectors, the Energy sector is the only sector that was also ranked in the top four in terms of highest percentage of Buy ratings on March 31, 2020. On the other hand, the three sectors that have seen the smallest price increases during this period are the Utilities (+11%), Consumer Staples (+21%), and Real Estate (+26%). These three sectors also had the lowest percentages of Buy ratings back on March 31, 2020. Thus, at the sector level, analysts were more accurate with their ratings on March 31, 2020 in predicting the bottom performers rather than the top performers in terms of price return almost one year later.

S&P 500 Price Change Since 03312020 vs Buy Ratings

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John Butters

Vice President, Senior Earnings Analyst, Investor Relations

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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