(News Bulletin 247) – Based on data from investing.com, we have compiled the percentage of analysts buying each index member. Which group comes out on top? We offer you an infographic.

This is an important aid to investment: the opinions of analysts. Asset managers and other financial professionals rely on the recommendations of “sell-side” analysts (who recommend stocks for external clients and not internally, unlike “buy-side”). These financial intermediaries carefully monitor information from listed companies, decipher their accounts, conduct fundamental analysis, and attempt to predict price movements.

They then issue recommendations and we can roughly retain three types of advice: buy, neutral/hold and sell.

Among the groups making up the CAC 40, which stocks are the most popular to buy? And, on the contrary, which are the ones that are least popular with analysts?

To get an idea, we relied on data from the site investing.com

, which lists the number of analysts buying (or equivalent), as well as neutral and selling for each stock. By a simple division, we have established a ranking of the stocks most recommended for purchase (as a percentage), via the infographic below.

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Not a guarantee of a good stock market performance

Let us point out straight away that a high buy recommendation rate does not automatically predict a good stock market performance. Counterexamples exist.

In recent years, the railway equipment manufacturer Alstom has almost always been a consensual value for purchase among design offices. This is particularly thanks to long-term advantages that are difficult to deny, such as its ESG (environmental, social, governance) appeal, thanks to an activity that emits little CO2, and the attractive prospects of rail, supported by State investment plans. This did not prevent the action from seeing a plunge of 36% over one year and 60.7% over three years (according to figures released Friday afternoon). The fault lies with the painful integration of Bombardier Transportation and a chaotic trajectory in terms of cash generation.

Likewise, Orpea (whose stock fell by more than 99%) was a stock rather appreciated by analysts before the accusations of mistreatment contained in the investigative book “The Gravediggers” and especially the heavy impact of inflation on finances of the company which resulted in its herculean financial restructuring.

Conversely, analyst recommendations sometimes end up paying off. When it was born, in January 2021, Stellantis was the subject of a buying consensus, with analysts praising its cost discipline, the synergies to be extracted and its “pricing power” (i.e. its ability to impose its prices on his clients). It took a little time but the manufacturer born from the merger between PSA and Fiat Chrysler ended up taking off well on the stock market, gaining 59.2% in 2023, the largest increase in the CAC 40.

Another scenario: quality stocks but which do not necessarily have a high purchase recommendation rate because analysts consider them “expensive” in terms of stock market multiples. This is regularly the case for Hermès or the aeronautical equipment manufacturer Safran. And yet these two stocks still tend to progress well (+76% over three years for Hermès and +62% for Safran).

Vivendi, Vinci and Axa in the lead

With these nuances in mind, which stocks have the best rating among analysts? Vivendi comes first, with a purchase recommendation rate of 90.9%. The media company’s plan to divide itself into four listed groups to reduce its heavy conglomerate discount has visibly convinced. However, it is worth emphasizing an important point: of the 40 companies, Vivendi is by far the one where investing.com lists the lowest analyst coverage (11 research firms). Which can increase (or decrease) the percentage more quickly if one or more analysts change their mind.

Vinci follows with a rate of 89.5%. Deutsche Bank praises, for example, the company’s diversification into concessions, its structural growth in energy infrastructure and construction, as well as its strong cash generation, which allows it to consider acquisitions while maintaining a very strong balance sheet. Axa finished third, with 88.24%. Jefferies appreciates the strategy put in place by CEO Thomas Buberl since his arrival, reducing its exposure to financial risks to reorient itself in property and casualty insurance and health. Bank of America appreciates the efforts of current management to improve shareholder returns, and believes that a price of 40 euros is in sight (compared to around 30 euros currently).

Followed by STMicroelectronics (fourth with 85%), which is heading towards a rebound in its activity in the second half of the year, which may encourage analysts to recommend buying this recovery. Then comes Saint-Gobain (82.4%), a group which has carried out asset rotations to direct its activity towards promising professions, such as construction chemicals. It should also be noted that Renault, a stock which has a turbulent recent stock market past, has become a consensus value (seventh at 80%), with several research firms having gone to purchase in recent months (such as Barclays and Goldman Sachs).

Conversely, the stocks with the least consensual purchase are Kering (25%), which is trying to revitalize its flagship brand Gucci in a complicated context of slowing demand for luxury products, Eurofins (26.3%), which is struggling to recover on the stock market post-Covid, the health crisis having “boosted” demand for its tests, and Legrand (27.8%). The electrical infrastructure specialist is suffering from its exposure to construction, which is one of the reasons which led UBS to go “sell” on the issue in December.

Note, more generally, that the CAC 40 groups are mainly recommended for purchase, with an average rate of 59.8% of recommendations for purchase and a median of 61%. This is due in particular to the low rate of recommendations for sale (1.7% on average). This last point can be explained, for example, by the fact that a sell recommendation is often risky, because it must be very well argued and can sometimes weaken the analyst’s relationship with the company.