Earnings Revisions At Two-Year High

Bespoke notes that analysts are becoming more bullish:

Our daily tracking of analyst revisions for stocks in the S&P 1500 shows that over the last four weeks, 578 companies in the S&P 1500 have seen their earnings estimates increase, while 389 have seen their numbers cut. This works out to a net of 189, or 12.6% of the index. As shown in the chart below, this is the highest level since at least the start of 2008 (red line), and is a major improvement off of where we were six months ago, when the net earnings revision ratio was closer to “-50%”. While analysts are typically thought of as being behind the curve, so far this year they have done a good job of leading the market. When equities bottomed in March (blue line), analyst revisions were already well off their lows of the year.

I should add that analysts aren’t so much as increasing their earnings estimates, they’re softening the earnings plunges. Still, it’s how bull markets start and it’s another reason why this isn’t a bear-market rally.

Posted by on September 28th, 2009 at 10:18 am


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