Corbin Perception Issues Latest Research
Buy Side Sentiment Trending Favorably As 2Q14 Earnings Season Kicks-off; Expectations Are High As Optimism Grows And Macro Concerns Take A Backseat
HARTFORD, Conn.--(BUSINESS WIRE)--Corbin Perception, an investor research and investor relations (IR) advisory firm, released today its quarterly research report Inside The Buy-side®, which captures trends in institutional investor sentiment heading into the earnings season.
“Our quarterly review indicates that institutional investor sentiment has reversed course quarter-over-quarter and the buy side is increasingly upbeat. Expectations heading into the second quarter are high with bullishness particularly strong for IT, healthcare and industrials.”
Despite ongoing concerns about global growth and geopolitical events dominating headlines, investor sentiment has improved from the previous quarter. The majority of surveyed investors describes their outlook as bullish or cautiously optimistic and attributes their views to an acceleration in economic activity, a more positive executive tone, a pickup in M&A and continued accommodative monetary support by the Fed. Asserting that the “unbelievable liquidity” presents virtually “no alternative to stocks,” investors remain comfortable allocating capital to equities but express mild concern regarding potential market implications of a premature rate hike.
Valuations are primarily viewed as fair at current levels, with 47% of respondents unequivocally stating they are sustainable, up from just 18% in the last quarter.
Corbin Perception found that just over one-third of surveyed participants believe the Fed will raise its benchmark interest rate in the first half of 2015, with Mark Livesay, portfolio manager at The Capital Management Corporation commenting, “I think economic statistics will begin to improve at a faster rate, necessitating a rate hike within 12 months.” Still, 40% of participants believe a rate hike will occur in the second half of 2015.
Commented Rebecca Corbin, Founder and President of Corbin Perception, “Our quarterly review indicates that institutional investor sentiment has reversed course quarter-over-quarter and the buy side is increasingly upbeat. Expectations heading into the second quarter are high with bullishness particularly strong for IT, healthcare and industrials.” She added, “At least for now, investors appear to be unfazed by heightened geopolitical tensions, slowing emerging market growth and a possible rate hike on the horizon.”
Further, Corbin Perception’s ongoing research on best uses of excess free cash reveal dividends as the leading investor preference followed by reinvestment, similar to last quarter. Of note, desire for share buybacks and debt reduction fell quarter-over-quarter as valuations continue to look rich and the cost of borrowing remains low.
Since 2006, Corbin Perception has tracked investor sentiment on a quarterly basis. Inside The Buy-side® and other research on real-time investor sentiment, IR best practices and case studies are available at CorbinPerception.com.
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Excerpts from Inside The Buy-side®
Corbin Perception interviewed 50 global institutional investors across diverse industries and investment styles to capture current sentiment heading into the second quarter earnings season; selected findings include:
- Investor sentiment is more positive, as 69% of contributors say they are cautiously optimistic to bullish, up from 49% last quarter
- As the second quarter earnings season gets underway, 80% of surveyed investors expect results to be in line with or better than consensus expectations
- Perceived executive management tone is also trending more positive; 32% note conversations are more upbeat, up from just 17% last quarter
- Participants report that consistent cash flow, balance sheet flexibility and operating margins are the most important financial characteristics in the current environment
- 47% state that market valuations are sustainable, up from 18% in the previous quarter
- Investment professionals report favoring the IT, healthcare and industrial sectors and express bearish sentiment toward telecom, utilities and consumer staples
- More than half see organic and EPS growth improving, a reversal from last quarter’s forecast of declines
- Dividends continue to be seen as the best use of excess free cash
- 76% believe the Fed will raise interest rates next year with 40% maintaining a hike will likely occur in the back half of 2015
About Corbin Perception
Corbin Perception is a leading investor research and IR advisory firm assisting public companies with driving long-term shareholder value. Core advisory services include Investor Perception Studies, Investor Targeting, Investor Presentations, Investor Days and Strategy Communication.
To access the full report, visit our website: www.corbinperception.com/research-library