Consensus Analyst Stock Ratings Creep Up

Bloomberg quantifies the consensus analyst rating for a stock on a scale of 1 (worst) to 5 (best).  Stocks with a 5 rating have 100% buy ratings.  We recently calculated the historical consensus ratings for all S&P 500 stocks and found the average daily consensus rating for the entire index going back a year.  As shown below, the consensus analyst rating for all S&P 500 stocks drifted lower with the overall market during the bear, but it bottomed about a month after the market bottomed back in March.  Interestingly, it picked up along with the market throughout the spring and early summer, but when the market stumbled in July, analysts got really bearish and then stayed bearish even as the market turned around and went higher.  Finally in mid-August, analysts began to believe in the rally again, and since then they've been upping their stock ratings.  Currently the consensus analyst rating for stocks in the S&P 500 is 3.74 (out of 5).

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Below we highlight the S&P 500 stocks with the highest and lowest percentage of buy ratings.  We only include stocks that have at least 8 analysts covering the company.  As shown, only one stock in the index, Thermo Fisher Scientific (TMO), has 100% buy ratings.  This is quite impressive given that there are 15 analysts covering the stock.  GameStop (GME), JM Smucker (SJM), and Lorillard (LO) are the only other stocks with more than 90% buy ratings.  Other notables on the list of stocks liked the most by analysts include Google (GOOG), Apple (AAPL), Coca-Cola (KO), MasterCard (MA), Pfizer (PFE), and Hewlett Packard (HPQ).

There are 7 stocks in the S&P 500 that have no buy ratings.  These 7 include Tesoro (TSO), Sun Micro (JAVA), Pulte Homes (PHM), AIG, Ameren (AEE), Brown-Forman (BF/B), and Sears Holdings (SHLD).  The list below contains all S&P 500 stocks with 15% or less buy ratings.

   

Comments

[preparedinvestor]

Would be interesting to compare this chart with the chart from 2003/2004 when the markets was recovering then ..

[tom brakke]

It is common to hear people talk about the average analyst rating as being an indicator of something. Some even use it as a contrary indicator, thinking that if everyone is in agreement, the only thing that can happen is for opinion to move the other way.

The key thing to remember is that studies that have been done on analyst recommendations have shown that there is really no predictive power in the average ratings themselves, but there are good signals in the change in average recommendations. Once the herd starts to move, it tends to keep moving for awhile.

[Generic Viagra]

Well, I have a little shop in Denver, and I say that I would love to see a rating 5 in my business! For sure! But I thank God that I have my way to get my food.