The company, which manages $14 trillion in assets for clients, raised its rating on the US stock from “neutral” to “overweight,” reports CNBC.
In its weekly market analysis, the company clarified that the events of the war had previously made it cautious about the stock. However, the prospect of a permanent ceasefire now leads strategists to conclude that there will be no significant consequences.
“We followed two signals that would encourage us to increase risk exposure again after we reduced it a few weeks ago. The first is tangible evidence of steps that will reopen the flow through the Strait of Hormuz. The second is a clear indication that the remaining macroeconomic impact is under control,” stated BlackRock, reports Index.hr.
“This comes at a time when expectations for corporate profits have risen for both the US and emerging markets for 2026 – and since the very beginning of the conflict on February 28.”
Moreover, BlackRock’s strategists add that “the threshold for the US and Iran to re-enter the war is high,” which further limits the potential damage.
At the same time, the forecast for corporate profits looks bright. In the earnings season just beginning, companies in the S&P 500 index are expected to post a 12.6% increase in total profits for the first quarter, according to FactSet data. If historical rates of beating expectations are maintained, that growth could climb to 19%, the analyst firm said.
The technology sector is particularly noteworthy, where profit growth of as much as 45% is expected this year. Despite this, the value of shares in that sector recorded only a slight increase this year.
Because of this, the valuation of shares in the information technology sector compared to the other 10 sectors of the S&P 500 index fell to the lowest level since mid-2020, BlackRock points out.
“We are again increasing risk exposure to the US and emerging markets due to strong corporate earnings expectations and limited overall damage to global growth,” the strategists said.
“In this US Q1 earnings season, we are focusing on profit margins and continue to favor thematic opportunities such as the defense sector.”
These two regions are the only ones for which BlackRock maintains an “overexposure” rating in its equity portfolio.
(Vijesti.ba)
