Analyst Revision Trends -- June 3, 2011

8/6/2019 Analyst Revision Trends -- June 3, 2011

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Ascendere Associates LLC Innovative Long/Short Equity Research

Analyst Revisions: June 3, 2011

In this report, we provide an overview of analyst estimate revisions for all stocks and ADRs that trade on major U.S. exchanges with a market cap above $750m.

We track changes in analyst revision estimates to aid in our stock selection and quantify already existing trends likely already reflected in stock prices. Investors typically use

analyst revisions in two ways.

Assume that current trends are likely to continue and select stocks with strong analyst revision momentum. Assume that analyst revision trends may at some point reach an inflection point and turn the other way.

The systematic momentum strategies that we often refer to assume current trends are likely to persist, but contrarian or value investors would do well to be aware of these

trends as well. For example, Fossil, Inc. (FOSL) is one example of a stock that has performed in line with increasing analyst revisions in recent months, while Micron

Technology (MU) is a great example of a stock that experienced a surge in stock price after negative analyst revisions bottomed in November 2010. As Micron could

indicate, companies that may have overly embedded negative fundamental information can experience strong price appreciation if there is only a slightly incremental

positive change in expected fundamentals. In contrast, Research In Motion (RIMM) is an example of a stock which demonstrated strong analyst revision trends at the end of

October 2010 but has since decline more than -32%.

In our opinion, analyst revisions in aggregate are by far a better economic indicator than leading or lagging indicators since they reflect changes in expectations at the micro

level. We would increasingly weight their relevance if analyst revisions confirm the implied direction of economic indicators.

Analyst Revision Trends as of June 3, 2011

Over the last week, we continue to see on average higher revenue estimate forecasts and lower EBIT and EPS forecasts. While the average FQ+1, FY+1 and FY+2 revenue

estimate revisions continues to be positive, FQ+1 revenue forecasts have moved down by -0.03%. This is a data point that bears watching.

If quarterly revenue forecasts increasingly turn negative, annual revenue estimate cuts may follow. This would put into jeopardy our view for continued aggregate

improvements in operating leverage, which in turn could drive market multiples higher or offset macro storms of negativity such as employment levels or sovereign debt

defaults.
http://www.ascenderellc.com/ascendere-associates-llc/


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3/18

-2.50%

-2.00%

-1.50%

-1.00%

-0.50%

0.00%

0.50%

1.00%

1.50%

Changes in Consensus Estimates as of June 3, 2011

FQ+1 FY+1 FY+2Al stocks on m ajor U.S. exchanges with a market cap above $750m.

Sourc e: Capital IQ consensus estimates and Ascendere Associates models.


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Changes in Consensus Estimates

As of June 3, 2011All stocks on major U.S. exchanges > $750m market cap

FQ+1 -1 Week -1 Month -3 Month Below Above

Revenue -0.03% 0.02% 0.38% 100% -100%

EBIT -0.10% -1.29% -2.23% 100% -100%

EPS -0.03% -0.78% -1.13% 100% -100%

FY+1

Revenue 0.01% 0.09% 0.63% 100% -100%

EBIT -0.03% -0.78% -1.13% 100% -100%

EPS -0.06% -0.99% -1.74% 100% -100%

FY+2

Revenue 0.04% 0.19% 0.89% 100% -100%

EBIT 0.02% -0.25% 0.11% 100% -100%

EPS -0.02% -0.73% -0.88% 100% -100%

Rating Changes 0.05% 0.34% 0.93% 100% -100%

Source: Capital IQ consensus estimates and Ascendere Associates models.

Range of Avg Change


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-0.20%

-0.15%

-0.10%

-0.05%

0.00%

0.05%

0.10%

0.15%

0.20%

Change in Consensus Forecasts

as of June 3, 2011

-1 Week

Average change in revenue, EBIT and EPS estimates for the the curent quarter, current fiscal year and next fiscal year of

all stocks that trade on major U.S. stock exchanges with a market cap above $750m.

Source: Ascendere Associates models, Capital IQ consensus data.


6/18

-1.20%

-1.00%

-0.80%

-0.60%

-0.40%

-0.20%

0.00%

0.20%

0.40%

0.60%

0.80%


as of June 3, 2011

-1 Month

Average change in revenue, EBIT and EPS estimates for the the curent quarter, current fiscal year and next fiscal year of

all stocks that trade on major U.S. stock exchanges with a market cap above $750m.



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-1.50%

-1.00%

-0.50%

0.00%

0.50%

1.00%

1.50%


as of June 3, 2011

-3 Month

Average change in revenue, EBIT and EPS estimates for the the curent quarter, current fiscal year and next

fiscal year of all stocks that trade on major U.S. stock exchanges with a market cap above $750m.



8/18

+1Q

Revenue -1 Week -1 Month -2 Month -3 Month Average Rank

Consumer Discretionary -0.04% -0.21% -0.42% -0.51% -0.25% 9

Consumer Staples -0.04% 0.90% 1.52% 2.18% 0.91% 3

Energy 0.01% 0.48% 2.50% 2.28% 1.12% 1

Financials -0.03% 0.25% 0.70% 1.19% 0.40% 5

Healthcare -0.13% -1.53% -1.83% -2.63% -1.24% 10

Industrials 0.07% 0.10% 0.63% 0.76% 0.31% 7

Information Technology -0.09% 0.18% 0.24% 0.24% 0.08% 8

Materials 0.04% 0.60% 2.20% 2.64% 1.11% 2

Telecommunication Servi -0.01% 0.39% 0.44% 1.00% 0.39% 6

Utilities -0.02% 0.68% 1.33% 0.86% 0.57% 4

+1Q

EBIT -1 Week -1 Month -2 Month -3 Month Average Rank


Consumer Staples 0.58% -0.05% -0.66% -1.23% -0.30% 3Energy -0.49% -0.72% 3.13% 3.53% 1.07% 1

Financials 0.04% -1.72% -2.16% -1.86% -1.19% 6

Healthcare 0.11% -1.82% -4.98% -4.81% -2.41% 8

Industrials -0.14% -1.35% -2.37% -3.16% -1.40% 7

Information Technology -0.37% -2.34% -4.53% -5.18% -2.69% 9

Materials -0.20% -1.29% -0.75% -0.75% -0.70% 4

Telecommunication Servi -0.07% -0.75% -1.95% -2.71% -1.14% 5

Utilities 0.27% -0.82% 0.42% -0.10% -0.06% 2

+1Q

EPS -1 Week -1 Month -2 Month -3 Month Average Rank

Consumer Discretionary 0.10% -1.21% -1.74% -2.33% -1.13% 7

Consumer Staples -0.18% 0.64% 0.34% -0.68% -0.03% 3

Energy 0.26% -1.37% 1.31% 2.48% 0.57% 1

Financials -0.08% -1.78% -2.15% -2.26% -1.29% 10

Healthcare 0.12% -0.89% -1.71% -3.16% -1.17% 8

Industrials -0.17% -0.04% -0.42% -0.92% -0.32% 4


Materials 0.06% -0.93% 0.68% 1.57% 0.26% 2


Utilities 0.02% -1.37% -1.04% -1.37% -0.80% 5

+1Q

Average All -1 Week -1 Month -2 Month -3 Month Average Rank


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+1FY


Consumer Discretionary 0.04% 0.16% 0.27% 0.33% 0.18% 8


Energy 0.12% -0.09% 1.91% 2.45% 0.90% 2

Financials -0.04% 0.25% 0.82% 1.35% 0.46% 6

Healthcare 0.11% -0.63% -1.09% -2.41% -0.85% 10

Industrials 0.03% 0.35% 1.20% 1.55% 0.63% 4

Information Technology -0.06% 0.02% 0.47% 0.52% 0.17% 9

Materials -0.01% 0.90% 2.11% 2.67% 1.18% 1

Telecommunication Servi -0.08% 0.20% 1.07% 2.09% 0.68% 3

Utilities -0.05% -0.40% 0.51% 0.67% 0.21% 7

+1FY



Consumer Staples -0.18% 0.64% 0.34% -0.68% -0.03% 3Energy 0.26% -1.37% 1.31% 2.48% 0.57% 1

Financials -0.08% -1.78% -2.15% -2.26% -1.29% 10

Healthcare 0.12% -0.89% -1.71% -3.16% -1.17% 8

Industrials -0.17% -0.04% -0.42% -0.92% -0.32% 4


Materials 0.06% -0.93% 0.68% 1.57% 0.26% 2


Utilities 0.02% -1.37% -1.04% -1.37% -0.80% 5

+1FY



Consumer Staples 0.18% -0.35% -0.67% -1.23% -0.39% 3

Energy -0.04% -4.30% -0.87% -0.22% -1.27% 8

Financials -0.33% -1.78% -3.44% -3.43% -1.94% 10

Healthcare 0.04% 0.21% 0.08% -0.81% -0.11% 2

Industrials -0.11% -0.63% -1.23% -2.21% -0.86% 6


Materials 0.11% -1.06% 0.77% -0.29% -0.08% 1

Telecommunication Servi 0.96% 1.18% -1.62% -3.53% -0.46% 4

Utilities -0.05% -0.65% -1.08% -2.05% -0.80% 5

+1FY



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+2FY


Consumer Discretionary 0.00% 0.20% 0.36% 0.38% 0.20% 8


Energy 0.26% 0.69% 3.34% 4.31% 1.80% 1

Financials 0.01% 0.39% 1.02% 1.34% 0.56% 6

Healthcare 0.12% -0.47% -0.80% -2.23% -0.70% 10

Industrials 0.11% 0.30% 1.44% 1.90% 0.76% 4Information Technology -0.02% 0.26% 0.73% 1.12% 0.42% 7

Materials 0.05% 0.42% 2.10% 2.59% 1.11% 2

Telecommunication Servi 0.02% 0.15% 0.86% 2.21% 0.67% 5

Utilities -0.02% -0.22% 0.13% 0.33% 0.08% 9

+2FY



Consumer Staples 0.37% 1.48% 2.09% 1.35% 1.11% 2

Energy 0.29% 0.63% 5.87% 5.96% 2.67% 1Financials -0.24% -1.02% -0.83% -1.27% -0.72% 9

Healthcare 0.39% -0.20% -0.99% -3.46% -0.86% 10

Industrials -0.11% -0.41% 0.65% 1.12% 0.24% 4


Materials -0.15% -0.33% 0.89% 1.99% 0.43% 3

Telecommunication Servi -0.26% -1.85% -0.36% 0.85% -0.36% 8

Utilities 0.05% -0.75% 0.59% 0.29% 0.04% 5

+2FY



Consumer Staples 0.06% 0.47% 0.55% 0.18% 0.21% 3

Energy 0.81% -0.49% 4.04% 3.90% 1.77% 1

Financials -0.56% -1.66% -2.02% -2.47% -1.45% 10

Healthcare 0.37% -1.06% -0.63% -3.78% -1.01% 9

Industrials -0.02% -0.77% -0.36% -0.09% -0.36% 6


Materials 0.14% -1.18% 0.44% 0.57% -0.02% 4

Telecommunication Servi 1.14% 1.15% 0.56% -1.12% 0.38% 2

Utilities -0.03% -0.14% -0.29% 0.05% -0.16% 5

+2FY




11/18

+1Q, +1FY, +2FY



Consumer Staples 0.08% 0.55% 0.68% 0.30% 0.32% 3Energy 0.17% -0.72% 2.50% 3.02% 1.02% 1

Financials -0.15% -0.98% -1.14% -1.07% -0.72% 7

Healthcare 0.14% -0.81% -1.52% -2.94% -1.06% 10

Industrials -0.06% -0.28% -0.09% -0.22% -0.14% 4


Materials 0.01% -0.42% 1.01% 1.39% 0.39% 2

Telecommunication Servi 0.16% -0.26% -0.48% -0.43% -0.19% 5

Utilities 0.02% -0.56% -0.05% -0.30% -0.19% 6

All stocks on major U.S. exchanges w ith a market cap above $750mSource: Capital IQ consensus estimates and Ascendere Associates models.


12/18

Consumer Discretionary Range of Averages


Revenue -0.04% -0.21% -0.51% 100% -100%

EBIT -0.32% -2.67% -6.18% 100% -100%

EPS 0.10% -1.21% -2.33% 100% -100%

FY+1

Revenue 0.04% 0.16% 0.33% 100% -100%

EBIT 0.10% -1.21% -2.33% 100% -100%

EPS 0.06% -1.16% -2.66% 100% -100%

FY+2

Revenue 0.00% 0.20% 0.38% 100% -100%

EBIT 0.15% -0.17% -0.45% 100% -100%

EPS -0.42% -0.76% -1.59% 100% -100%

Rating Changes 0.01% -0.12% 0.29% 100% -100%

All stocks on major U.S. exchanges w ith a market cap above $750mSource: Capital IQ consensus estimates and Ascendere A ssociates models.

Consumer Staples Range of Averages


Revenue -0.04% 0.90% 2.18% 100% -100%

EBIT 0.58% -0.05% -1.23% 100% -100%

EPS -0.18% 0.64% -0.68% 100% -100%

FY+1

Revenue -0.06% 0.58% 1.23% 100% -100%

EBIT -0.18% 0.64% -0.68% 100% -100%EPS 0.18% -0.35% -1.23% 100% -100%

FY+2

Revenue -0.02% 0.67% 1.61% 100% -100%

EBIT 0.37% 1.48% 1.35% 100% -100%

EPS 0.06% 0.47% 0.18% 100% -100%

Rating Changes -0.40% 0.13% 0.78% 100% -100%

All stocks on major U.S. exchanges w ith a market cap above $750m

Source: Capital IQ consensus estimates and Ascendere A ssociates models.


13/18

Energy Range of Averages


Revenue 0.01% 0.48% 2.28% 100% -100%

EBIT -0.49% -0.72% 3.53% 100% -100%

EPS 0.26% -1.37% 2.48% 100% -100%

FY+1

Revenue 0.12% -0.09% 2.45% 100% -100%

EBIT 0.26% -1.37% 2.48% 100% -100%

EPS -0.04% -4.30% -0.22% 100% -100%

FY+2

Revenue 0.26% 0.69% 4.31% 100% -100%

EBIT 0.29% 0.63% 5.96% 100% -100%

EPS 0.81% -0.49% 3.90% 100% -100%

Rating Changes 0.34% 1.27% 2.51% 100% -100%


Financials Range of Averages


Revenue -0.03% 0.25% 1.19% 100% -100%

EBIT 0.04% -1.72% -1.86% 100% -100%

EPS -0.08% -1.78% -2.26% 100% -100%

FY+1

Revenue -0.04% 0.25% 1.35% 100% -100%

EBIT -0.08% -1.78% -2.26% 100% -100%EPS -0.33% -1.78% -3.43% 100% -100%

FY+2

Revenue 0.01% 0.39% 1.34% 100% -100%

EBIT -0.24% -1.02% -1.27% 100% -100%

EPS -0.56% -1.66% -2.47% 100% -100%

Rating Changes 0.01% 0.42% 1.33% 100% -100%




14/18

Healthcare Range of Averages


Revenue -0.13% -1.53% -2.63% 100% -100%

EBIT 0.11% -1.82% -4.81% 100% -100%

EPS 0.12% -0.89% -3.16% 100% -100%

FY+1

Revenue 0.11% -0.63% -2.41% 100% -100%

EBIT 0.12% -0.89% -3.16% 100% -100%

EPS 0.04% 0.21% -0.81% 100% -100%

FY+2

Revenue 0.12% -0.47% -2.23% 100% -100%

EBIT 0.39% -0.20% -3.46% 100% -100%

EPS 0.37% -1.06% -3.78% 100% -100%

Rating Changes 0.10% 0.57% 1.81% 100% -100%


Industrials Range of Averages


Revenue 0.07% 0.10% 0.76% 100% -100%

EBIT -0.14% -1.35% -3.16% 100% -100%

EPS -0.17% -0.04% -0.92% 100% -100%

FY+1

Revenue 0.03% 0.35% 1.55% 100% -100%

EBIT -0.17% -0.04% -0.92% 100% -100%EPS -0.11% -0.63% -2.21% 100% -100%

FY+2

Revenue 0.11% 0.30% 1.90% 100% -100%

EBIT -0.11% -0.41% 1.12% 100% -100%

EPS -0.02% -0.77% -0.09% 100% -100%

Rating Changes -0.05% 0.35% 0.64% 100% -100%




15/18

Information Technology Range of Averages


Revenue -0.09% 0.18% 0.24% 100% -100%

EBIT -0.37% -2.34% -5.18% 100% -100%

EPS -0.26% -0.98% -2.65% 100% -100%

FY+1Revenue -0.06% 0.02% 0.52% 100% -100%

EBIT -0.26% -0.98% -2.65% 100% -100%

EPS -0.23% -1.64% -3.77% 100% -100%

FY+2

Revenue -0.02% 0.26% 1.12% 100% -100%

EBIT -0.06% -0.33% -0.20% 100% -100%

EPS -0.06% -1.26% -2.05% 100% -100%

Rating Changes 0.23% 0.73% 1.26% 100% -100%


Materials Range of Averages


Revenue 0.04% 0.60% 2.64% 100% -100%

EBIT -0.20% -1.29% -0.75% 100% -100%

EPS 0.06% -0.93% 1.57% 100% -100%

FY+1

Revenue -0.01% 0.90% 2.67% 100% -100%

EBIT 0.06% -0.93% 1.57% 100% -100%EPS 0.11% -1.06% -0.29% 100% -100%

FY+2

Revenue 0.05% 0.42% 2.59% 100% -100%

EBIT -0.15% -0.33% 1.99% 100% -100%

EPS 0.14% -1.18% 0.57% 100% -100%

Rating Changes 0.06% 0.65% 1.57% 100% -100%




16/18

Telecommunication Services Range of Averages


Revenue -0.01% 0.39% 1.00% 100% -100%

EBIT -0.07% -0.75% -2.71% 100% -100%

EPS -0.13% -1.39% -1.33% 100% -100%

FY+1

Revenue -0.08% 0.20% 2.09% 100% -100%

EBIT -0.13% -1.39% -1.33% 100% -100%

EPS 0.96% 1.18% -3.53% 100% -100%

FY+2

Revenue 0.02% 0.15% 2.21% 100% -100%

EBIT -0.26% -1.85% 0.85% 100% -100%

EPS 1.14% 1.15% -1.12% 100% -100%

Rating Changes -0.04% 0.21% 0.67% 100% -100%

All stocks on major U.S. exchanges w ith a market cap above $750mSource: Capital IQ consensus es timates and Ascendere Ass ociates models.

Utilities Range of Averages


Revenue -0.02% 0.68% 0.86% 100% -100%

EBIT 0.27% -0.82% -0.10% 100% -100%

EPS 0.02% -1.37% -1.37% 100% -100%

FY+1

Revenue -0.05% -0.40% 0.67% 100% -100%

EBIT 0.02% -1.37% -1.37% 100% -100%EPS -0.05% -0.65% -2.05% 100% -100%

FY+2

Revenue -0.02% -0.22% 0.33% 100% -100%

EBIT 0.05% -0.75% 0.29% 100% -100%

EPS -0.03% -0.14% 0.05% 100% -100%

Rating Changes -0.03% -0.80% 0.35% 100% -100%


Source: Capital IQ consensus es timates and Ascendere Ass ociates models.


17/18

DISCLOSURES

There are limitations inherent in our backtested theoretical model results, particularly with the fact that such results do not represent actual trading and they may not reflect

the impact material economic and market factors might have had on our decision making if we were actually managing client money. Please see additional disclosures and

disclaimers at the back of this report.

Ascendere is in the business of providing equity research and related consulting services to investors and their advisors. The equity research it provides includes basic

quantitative model portfolios and more detailed fundamental research with respect to individual stocks. In addition, the firm manages stock portfolios for itself and clients.

Ascendere does not rate stocks on any scale, but does offer individual stock commentary and valuation opinions. With regard to Ascendere's portfolio strategies, "long" or

"high-quality" baskets should generally be considered buys, unless otherwise noted. Stocks in our "short" or "low-quality" baskets should generally be considered sells,

unless otherwise noted. While exceptions may occasionally occur, typically stocks in the high-quality basket are expected to outperform the S&P 500 over a month's time

and stocks in the low-quality basket are expected to underperform. A more relevant benchmark would comprise of all stocks and ADRs that trade on major U.S. stock

exchanges with a market cap above $2 billion.

Ascendere adheres to professional standards and abides by codes of ethics that put the interests of clients ahead of its own. The following are specific disclosures made by

Ascendere:

1) Ascendere may have a financial interest in the companies referred to in this report ("the Companies"). The research analyst covering the Companies and members

of the analyst's immediate family have a financial interest in one or more of the Companies.

2) Ascendere generates revenue from research subscription revenue and portfolio management fees. At any given time it may be long or short any of the Companies.

3) Ascendere does not make a market in the securities of any of the Companies.

4) Ascendere has not received compensation from the Companies.

5) Ascendere has not managed or co-managed a public offering for any of the Companies.

6) Neither Ascendere nor any of its officers or any family member of the covering analyst serve as an officer, director or advisory board member of any of the

Companies.

7) Neither Ascendere nor any of its officers or any family member of the covering analyst beneficially own 1% or more of any class of securities of any of the

Companies.


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DISCLAIMERS

This report is intended for informational purposes only and does not constitute a recommendation, or an offer, to buy or sell any securities or related financial instruments.

The report is not intended to be in furtherance of the specific investment objectives, financial situation, or particular needs of any individual recipient. Investment decisions

should be based on an individual's own goals, time horizon and tolerance for risk. The information contained herein accurately reflects the opinion of Ascendere at the time

the report was released. The opinions of Ascendere are subject to change at any time without notice and without obligation or notification. The officers, affiliates or family

members of Ascendere Associates may hold positions in the securities of the Companies. No warranty is made as to the accuracy of the information contained herein. The

views and opinions expressed in the market commentary reflect the opinions of the author and may be based upon information obtained from third-party sources believed

to be reliable but not guaranteed. These opinions are subject to change at any time based upon market or other conditions. Ascendere disclaims any responsibility toupdate such views. This information is intended for the sole use of clients of Ascendere. Any other use, distribution or reproduction is strictly prohibited. Investing in stocks

includes a high degree of risk, including the risk of total loss. This is for informational purposes only and is not intended to constitute a current or past recommendation,

investment advice of any kind, or a solicitation of an offer to buy or sell any securities or investment services. All information, opinions and estimates are current as of

original distribution by author and are subject to change at any time without notice. Any companies, securities and/or markets referenced are solely for illustrative purposes.

Past performance is not indicative of future performance, and no representation or warranty, express or implied, is made regarding future performance.

For Investment Professional use only. NOT FOR FURTHER DISTRIBUTION. Any dissemination or copying of this commentary is strictly prohibited.

Investing in stocks includes a high degree of risk, including the risk of total loss.

Analyst Revision Trends -- June 3, 2011

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