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Research Alert: CFRA Lowers Opinion On Consumer Discretionary To Marketweight From Overweight

05/11/2021 05:17

09:10 AM EDT, 05/11/2021 (MT Newswires) -- CFRA, an independent research provider, has provided MT Newswires with the following research alert. Analysts at CFRA have summarized their opinion as follows:

We lowered our recommended exposure to the S&P 500 Consumer Discretionary sector to marketweight from overweight. With commodity prices, wage pressures, transportation/freight rates, and numerous other factors pressuring costs, CFRA thinks profit margins are likely to be squeezed. In addition, Fed Chair Powell recently said it was unlikely that supplemental unemployment payments from the federal government would extend past September. This could cause consumers to start to pull back on discretionary spending. Even though the sector is expected to record 2021 EPS growth of 39%, according to S&P Capital IQ's Consensus Estimates, vs. the S&P 500's projected 31% growth rate, the sector sports the highest absolute P/E premium of all 11 sectors, based on next 12-month (NTM) EPS estimates. Finally, its nine-month relative price performance places it among the bottom four sectors.