* Introducing Beat Factor
Beat Factor identifies our most out-of-consensus stock ideas within BofAML coverage
of FTSEEurofirst 300 stocks. It compares our analysts’ price objectives and earnings
estimates from our proprietary iQdatabase with sell-side consensus estimates of those
items, using a quantitative approach. By aggregating bottom-up estimates of all our
developed Europe coverage, the framework also finds sectors where our analysts are
most upbeat/downbeat vs consensus, as well as our bottom-up Pan-European market
view. We would be updating the Beat Factor every month.
Market Beat
On aggregating 460 stocks, BofAML analysts expect a 12 month return of 13%, broadly
in line with consensus. However, our analysts are more optimistic on FY1 earnings than
consensus, expecting FY1 EPS growth of 3.6% (versus consensus nil growth) but
downbeat on FY2 EPS growth of 5.3% (versus 7.7% consensus). The sentiment is
broadly neutral as we upgraded ratings for seven stocks and downgraded for equal
number of stocks last month (Chart 8).
Sector Beat
BofAML analysts expect above-market returns in Technology (25% upside), Health Care
(21%) and Telecoms (19%). Based on Beat Factor, Technology and Financials are most
favored (Chart 11). Energy is the only sector where we expect absolute negative returns
(-5%) and is the most downbeat sector as per Beat Factor (Chart 11).
Stock Beat
Stock Beat lists the top 30 most out-of-consensus stock ideas from our coverage in the
FTSEurofirst 300 Index. Table 1 shows the top-10 out-of-consensus longs and shorts -
for the full list of 30 stocks, please see Table 3. Lists are updated monthly.