Oppenheimer Upgrades Utilities Sector, Downgrades Real Estate By Investing.com

Oppenheimer analysts in a broad-based note on Tuesday upgraded the utility sector and downgraded real estate, reporting positive earnings growth.

The company highlighted that eight of the 11 sectors in the S&P 500 are seeing earnings growth, with six seeing double-digit gains.

These include communication services (+41%), utilities (+31%), consumer goods (+27%), information technology (+24%), finance (+11%) and real estate (+11%).

“With 96% (481 companies) of S&P 500 companies reporting first-quarter earnings, earnings are exceeding expectations. Overall earnings increased 7.7% on the back of 4.1% revenue growth. Ahead of the Bloomberg season, our bottom-up estimate for Q1 earnings growth is 3.9%,” Oppenheimer said.

The company also noted that economic data released last week showed increased activity in U.S. services and manufacturing, suggesting that inflation rigidity may persist, raising the likelihood that the Fed could pause monetary policy for longer than some market participants had hope.

Overall, the utility was upgraded from “Performant” to “Inferior,” with Oppenheimer also raising the suggested weighting for the sector from 2.5% to 2.7%. The rating for the real estate sector was downgraded from Perform to Underperform, leaving the suggested allocation unchanged at 2%.