• Analyst sell ratings for the FTSE 350 delivered a positive return of 28.9% in 2019
• That outperformed the index return of 19.2% and the 23.2% return delivered by their buy ratings
• Analysts fared better when looking at just the FTSE 100 where their buy ratings returned 23.2% compared to 18.4% from their sell ratings and 17.3% from the index
• The highest proportion of sell ratings for 2020 are on Hargreaves Lansdown and Mike Ashley’s recently renamed Frasers Group
• Melrose Industries and NMC Health have the higher proportion of buy ratings in the FTSE 100
FTSE 350 analyst ratings 2019
|
FTSE 350 – most popular stocks |
|
FTSE 350 – least popular stocks |
||||
|
|
Buy ratings |
Total returns in 2019 |
|
|
Sell ratings |
Total returns in 2019 |
|
Avast |
100% |
63.1% |
|
Pearson |
56% |
(30.1%) |
|
Polypipe |
100% |
68.6% |
|
Marks & Spencer |
52% |
(5.0%) |
|
Coats |
100% |
(6.4%) |
|
Millennium & Copthorne |
50% |
47.6% |
|
BCA Marketplace |
100% |
10.4% |
|
Frasers Group |
50% |
92.9% |
|
Energean Oil & Gas |
100% |
48.0% |
|
Admiral Group |
50% |
19.1% |
|
St. Modwen |
100% |
27.4% |
|
Royal Mail |
47% |
(7.8%) |
|
Telecom Plus |
100% |
8.7% |
|
Wetherspoon JD |
43% |
50.5% |
|
CLS |
100% |
46.2% |
|
IWG |
43% |
111.0% |
|
Primary Health Properties |
100% |
49.2% |
|
Hargreaves Lansdown |
43% |
6.9% |
|
Sirius Minerals |
100% |
(82.9%) |
|
TalkTalk Telecom |
40% |
4.1% |
|
Total |
|
23.2% |
|
Total |
|
28.9% |
|
FTSE 350 |
51% |
19.2% |
|
FTSE 350 |
11% |
19.2% |
Source: Sharecast, Broker Forecasts, Refinitiv data. Percentages of ‘buy’ and ‘sell’ ratings as of 2 January 2019
FTSE 100 analyst ratings 2019
|
FTSE 100 – most popular stocks |
|
FTSE 100 – least popular stocks |
||||
|
|
Buy ratings |
Total returns in 2019 |
|
|
Sell ratings |
Total returns in 2019 |
|
DCC |
93% |
11.7% |
|
Pearson |
56% |
(30.1%) |
|
Informa |
92% |
39.5% |
|
Marks & Spencer |
52% |
(5.0%) |
|
Melrose Industries |
91% |
49.4% |
|
Admiral Group |
50% |
19.1% |
|
NMC Health |
89% |
(34.8%) |
|
Hargreaves Lansdown |
43% |
6.9% |
|
GVC |
87% |
36.2% |
|
Berkeley |
36% |
40.2% |
|
Mondi |
86% |
12.9% |
|
Flutter Entertainment |
36% |
47.3% |
|
SEGRO |
86% |
55.8% |
|
Rolls Royce |
35% |
(16.3%) |
|
Glencore |
84% |
(13.7%) |
|
Severn Trent |
33% |
43.8% |
|
3i |
80% |
46.8% |
|
National Grid |
31% |
29.8% |
|
St. James's Place |
80% |
28.5% |
|
Rightmove |
30% |
48.2% |
|
Total |
|
23.2% |
|
Total |
|
18.4% |
|
FTSE 100 |
52% |
17.3% |
|
FTSE 100 |
12% |
17.3% |
Source: Sharecast, Broker Forecasts, Refinitiv data. Percentages of ‘buy’ and ‘sell’ ratings as of 2 January 2019
Russ Mould, investment director at AJ Bell (and ex equity analyst), comments:
“We have back-tested the performance of analyst ratings since 2015 and the conclusion from 2019’s data is the same as in prior years, namely that the value in analyst research lies in their commentary and analysis, while the ratings themselves need to be treated with a huge dollop of caution.
“The point of this exercise is not to poke fun at the analysts (I used to be one). It just shows how hard picking individual stocks can be, even if it is your full-time job.
“The good news, from the brokers’ point of view, was that the FTSE 350 stocks with the greatest percentage of ‘buy’ ratings went up and – on average – provided a total return which exceeded that of the index. The bad news was that the stocks with the greatest percentage of ‘sell’ ratings not only beat the index but outperformed their buy ratings
“The picture is a bit rosier for analysts if you just look at the FTSE 100, where the stocks that came with the highest percentage of buy ratings beat both the index and the names they were keenest to avoid.
“Some slack can be cut for the beleaguered analysts, since we are still in a bull market, merger and acquisition activity is running hot and 2019 was generally a good year for equities right around the globe. Putting up sell ratings is therefore a potentially thankless task and at least the analysts’ combined top picks did beat the index, something that they had failed to do in 2015, 2016, 2017 and 2018.
“In that context, however, it is interesting to note that the broking community is carrying the lowest percentage of buy ratings and the highest percentage of sells going into 2020 since we began this annual survey, at least so far as the FTSE 100 is concerned.
“Wilful contrarians may be cheeky enough to think it is a ‘buy’ signal, even if logically there should be fewer buys and more sells the higher headline indices go.
|
|
|
FTSE 100 |
|
|
|
FTSE 350 |
|
|
|
Buys |
Holds |
Sells |
|
Buys |
Holds |
Sells |
|
2015 |
47% |
39% |
14% |
|
49% |
39% |
12% |
|
2016 |
47% |
40% |
13% |
|
48% |
40% |
12% |
|
2017 |
45% |
40% |
15% |
|
47% |
39% |
15% |
|
2018 |
49% |
37% |
14% |
|
48% |
38% |
13% |
|
2019 |
52% |
36% |
12% |
|
51% |
38% |
11% |
|
2020 |
46% |
38% |
16% |
|
47% |
39% |
14% |
Source: Sharecast, Broker Forecasts
“The data also suggest that anyone prepared to pick their own stocks rather than pay a fund manager or index-tracker fund to do it for them simply must do their own research on individual companies they even think about buying or selling any of its shares.
Outlook for 2020
The two tables below list the names which investors may wish to analyse in greater depth, or simply avoid altogether, depending upon their view of the value of analyst ratings.
FTSE 100 analyst ratings 2020
|
FTSE 100 – most popular stocks |
|
FTSE 100 – least popular stocks |
||
|
|
Buy ratings, % |
|
|
Sell ratings, % |
|
Melrose Industries |
92% |
|
Hargreaves Lansdown |
67% |
|
NMC Health |
90% |
|
Kingfisher |
50% |
|
Coca-Cola HBC |
86% |
|
Rightmove |
50% |
|
M & G |
86% |
|
Sage |
50% |
|
Vodafone |
83% |
|
Intertek |
47% |
|
International Cons. Airlines |
83% |
|
Admiral Group |
45% |
|
DCC |
80% |
|
Standard Chartered |
44% |
|
Smurfit Kappa |
80% |
|
InterContinental Hotels |
43% |
|
British American Tobacco |
79% |
|
Ocado |
43% |
|
JD Sports Fashion |
78% |
|
Pearson |
41% |
|
FTSE 100 |
46% |
|
FTSE 100 |
16% |
Source: Sharecast, Broker Forecasts, Refinitiv data. Percentages of ‘buy’ and ‘sell’ ratings as of 2 January 2020
FTSE 350 analyst ratings 2020
|
FTSE 350 – most popular stocks |
|
FTSE 350 – least popular stocks |
||
|
|
Buy ratings, % |
|
|
Sell ratings, % |
|
Vivo Energy |
100% |
|
Hargreaves Lansdown |
67% |
|
Brewin Dolphin |
100% |
|
Frasers Group |
67% |
|
Countryside Properties |
100% |
|
TalkTalk Telecom |
58% |
|
Energean Oil & Gas |
100% |
|
Jupiter Fund Management |
57% |
|
Future |
100% |
|
Aggreko |
55% |
|
CLS |
100% |
|
Sage |
50% |
|
PPHE Hotel |
100% |
|
Kingfisher |
50% |
|
PureTech Health |
100% |
|
Royal Mail |
50% |
|
Airtel Africa |
100% |
|
Rightmove |
50% |
|
Galliford Try |
100% |
|
Barr AG |
50% |
|
FTSE 350 |
47% |
|
FTSE 350 |
14% |
Source: Sharecast, Broker Forecasts, Refinitiv data. Percentages of ‘buy’ and ‘sell’ ratings as of 2 January 2020
