Where Are Analysts Most Optimistic on Ratings for S&P 500 Companies Heading Into Q4 2022?

Given declining earnings estimates and rising concerns about a recession, 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 10,616 ratings on stocks in the S&P 500. Of these ratings, 55.6% are Buy ratings, 38.7% are Hold ratings, and 5.7% are Sell ratings. The percentage of Buy ratings is above the 5-year (month-end) average of 53.6%, while the percentages of Hold and Sell ratings are below their 5-year (month-end) averages of 40.4% and 6.0%.

The percentage of Buy ratings has declined over the past seven months from a peak of 57.4% at the end of February to 55.6% today. However, the percentage of Buy ratings is still high relative to the past ten years. Prior to the recent surge in Buy ratings, the last time the (month-end) percentage of Buy ratings exceeded 55% was September 2011 (55.8%).

At the sector level, analysts are most optimistic on the Energy (63%), Information Technology (62%), and Real Estate (62%) 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%) and Utilities (49%) sectors, as these two sectors have the lowest percentages of Buy ratings. The Consumer Staples sector also has the highest percentage of Hold ratings (50%), while the Utilities sector also has the highest percentage of Sell ratings (12%).

Ten of the eleven sectors have seen a decline in Buy ratings since the February peak, led by the Energy sector (to 63% from 68%). On the other hand, the Real Estate sector (to 62% from 55%) is the only sector that has seen an increase in Buy ratings during this time. Outside of the Real Estate sector, there has been little change at the sector level in terms of ranking by Buy ratings. The same two sectors (Energy and Information Technology) have the highest percentages of Buy ratings today compared to the end of February, while the same two sectors (Consumer Staples and Utilities) have the lowest percentages of Buy ratings today compared to the end of February.

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

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

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