Wall Street Analysts Give 74% of Energy Stocks Buy Ratings Despite the Sector’s Stubborn Slump
The energy sector just became Wall Street’s favorite ugly duckling. Despite a lackluster performance that’s left it trailing behind broader markets, analysts have slapped Buy ratings on 74% of energy stocks — the highest concentration across all S&P 500 sectors. This bullish stance comes even as oil prices have tumbled ~7% this year and energy remains one of just three index segments stuck in red territory.
- Wall Street analysts expect energy stocks to rise about 16% over the next year — second only to healthcare and nearly twice the projected return of the broader market.
- Energy companies currently have the lowest price-to-earnings ratios in the S&P 500, and Bloomberg Intelligence forecasts they’ll lead in earnings growth by 2026.
The drill thrill: The optimism also partly stems from President Trump’s “drill, baby, drill” rhetoric and policy shifts that removed renewable energy credits while providing benefits to oil and gas producers. Energy stocks have historically acted as inflation hedges — topping all sectors in 2022 as consumer prices surged — a trait that could prove useful if tariffs push costs higher. Still, BMO Capital Markets forecasts a 30% drop in second-quarter earnings, citing pressure from declining crude prices.