RBC Capital Markets Backs Financials, Energy, and Upgrades Communication Services for 2025
RBC Capital Markets has reiterated its Overweight ratings on Financials and Energy sectors while upgrading Communication Services as it looks ahead to 2025. The Financials sector has benefited from post-election momentum, driven by anticipated corporate tax cuts, deregulation, and mergers and acquisitions. Historically, Financials outperform when consumer sentiment improves, with RBC noting strong earnings and sales revisions despite higher valuations.
Energy remains a contrarian pick, supported by favorable valuations and resilience to a stronger US dollar. While risks from geopolitical tensions exist, the sector is buoyed by recovering global fund flows.
Communication Services, now upgraded to Overweight, is showing promise with a median P/E ratio below market average and rising consensus forecasts for 2024. Its low sensitivity to the US dollar and correlation with consumer sentiment position it well for potential growth. However, risks include underperformance during rising 10-year yields.
By Mr. Ram | CryptoEarningsHQ
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