With the Ftse Mib up 0.5% to 26.325 and almost 18% from the beginning of the year, Intermonte’s promotion to Piazza Affari arrives. Over 60% of the companies that the Milanese SIM covers, in fact, exceeded expectations in the second quarter, these are 77 cases, equal to 61% of the total which reported better results than expected, while only 6 companies registered accounts below the expectations. Generally speaking, this is a “very high level” (positive) ratio of 7.8 times in the second quarter of the year. The sectors that recorded higher than expected profits are the industrial, consumer and asset management sectors, while “the few negative surprises came from telecommunications, banks and energy”.
The flurry of better-than-expected results translated into “a massive upward revision of the estimates for the Italian market, the size of which was unprecedented: 2021 earnings per share were raised by almost 18%, while the revision for 2022 and + 9.3% “. As a result of the change in estimates, analysts now expect earnings per share to rise 82% yoy in 2021 and a further 10% increase in 2022.
From the Intermonte analysis it emerged that, in terms of revenues, the Italian market has almost returned to pre-Covid levels, while there is still a small gap in terms of operating profit (especially excluding particular situations such as Stellantis, which benefits from the merger between Psa and FCA). “It is interesting to note”, writes the Sim, “that the implicit estimates for the second half indicate an improvement compared to the second half of 2020, which was still affected by Covid, but show a normalization of growth compared to the second half of 2019, at the time pre-Covid “.
Despite these positive results, the reactions on the stock market, analysts write, were not adequate, “probably because expectations were already positive but above all”, writes Intermonte, “because there are some future challenges that must be overcome”. The second quarter was hit only sideways by component shortages and significant increases in raw materials and freight costs. Many companies will begin “to face these headwinds starting from the second half of 2021”, writes the Milanese SIM, “which could curb the enthusiasm for the good direction of profits in the coming months”.
However, analysts say they are confident that “the demand for new contracts is good and the start of some investments linked to spending and infrastructure plans will support growth in a scenario of low interest rates that remains favorable to risky assets”. Italian shares are traded at relatively cheap multiples after Intermonte’s new estimates, namely at 13.6 times the price / earnings ratio in 2021 and 12.4 times in 2022, however “slightly below the historical average. “. Clearly, Intermonte underlines, “it remains essential that the growth path in earnings continues as expected, accompanied by a favorable macroeconomic environment”. And the
The approval of the justice reform in the short term and the government’s busy agenda in the coming months will be further positive elements in support of a bullish stance on Italian equities, Intermonte believes, “albeit within a more volatile context”. Finally, in the fourth quarter there will be significant dividend flows from financial stocks following the removal of the ban by the ECB. (All rights reserved)
