BofA says momentum style supported by earnings revisions

Investing.com -- Bank of America reported that the momentum investment style shows strong earnings revision data, with analysts upgrading momentum stocks at a rate more than three times higher than downgrades.

Last week, the earnings revision ratio for the global momentum style reached 3.14, according to the bank's analysis. This ratio indicates that analysts revised upward more than three times as many momentum stocks as they downgraded.

The momentum style posted strong results in the second quarter globally but retreated in July as investors questioned artificial intelligence investment themes. In July, momentum underperformed the MSCI AC World Index by 10.5%, while risk declined 13.3% and growth fell 7.2%. Dividend and value styles outperformed during the same period, gaining 4.9% and 4.4% respectively.

In August through Tuesday, growth, momentum, and risk styles have outperformed, supported by continued earnings strength.

Year to date, cyclical global boosters have outperformed defensive bunkers by 25.9%. The relative performance of boosters versus bunkers has shown a 72% correlation with the global earnings revision ratio since 1998. Bank of America noted that the recent improvement in the global earnings revision ratio represents a positive signal for global boosters.

You May Also Be Interested In

• ADP Employment Change (Aug) 38K vs 47K Expected
• Huang Calls AI 'the Great Equalizer' During G20 Event
• NIO (NIO) PT Lowered to $5 at Bernstein SocGen Group