IAS - Big bank shifts focus from lofty Software stocks to momentum-heavy Media: Here's their picks

In a big new sector call, Wells Fargo has downgraded the Software industry to Underweight - and boosted Media and Entertainment to Overweight. It's citing "technicals, valuation and earnings revisions" as the basis for the changes - and starts by noting that Software has done well in 2021, rallying 30% since mid-March (outpacing the market by more than 15%). And a premium valuation there is "hard to justify when we see attractive alternatives and a potential shift in the market's risk appetite," analysts Christopher Harvey, Gary Liebowitz and their team write. The rally so far has pushed Software to a 75% premium in forward price/earnings vs. the overall market; they say that's comparable to 1999-2000. Year-to-date, Software companies' revisions (15%) are much lower than that in Media & Entertainment (35%), not to mention the broader market (20%), and "earnings growth looks like it has peaked or is about to peak."

For further details see:

Big bank shifts focus from lofty Software stocks to momentum-heavy Media: Here's their picks