×
Newsmax TV & Webwww.newsmax.comFREE - In Google Play
VIEW
×
Newsmax TV & Webwww.newsmax.comFREE - On the App Store
VIEW
Tags: faang stocks | big tech | stock valuations | price to equity

'Growth' Stocks Still Not Cheap, Cautions JPMorgan

Big Tech
(Dreamstime)

Monday, 21 February 2022 02:19 PM EST

Tech-dominated "growth" stocks are still not cheap despite some sharp falls over the last six months, analysts at U.S. investment bank JPMorgan cautioned on Monday.

The so-called FAANGs have seen some of their COVID-era surges cut back this year, with Facebook down 38%, Apple down 5.7%, Amazon down 8.5% and Netflix and Google down 35% and 10% respectively. 

Other Techs Down 30%

JPMorgan's analysts estimate that, on average, tech firms that are yet to even make a profit have lost 30% of their value since peaks around September last year, while 'fintech' firms which focus on tech-savvy banking apps and tools have dropped 40%.

"As Growth stocks weakened of late, they derated, but are still not outright cheap," JPMorgan's analysts said in a note to clients, adding that banks and commodity-linked stocks which have rallied this year thanks to rising oil and metals prices or interest rates were still "far from expensive."

The chance is that the earnings of 'growth' sectors might not be exceptional anymore, although the big driver remains bond market borrowing costs, which have shot up this year as top central banks have laid the groundwork for interest rate rises.

Years of record-low rates have fueled the tech stock rally but with those rates now rising again the appeal of stratospherically-valued tech stocks gets dimmer for investors, especially if their growth trajectories splutter.

"We believe that bond yields will keep moving higher through the course of the year," JPMorgan said referring to the bond market costs.

Risk-On in the Spring

"Our fixed income strategists expect U.S. 10-year (Treasury) yields to reach 2.35% by the end of this year, and German 10-year yields to reach 0.5%." Treasury yields are now at 1.92% and Germany bunds are at 0.2%.

They also said that the tensions building between Russia and Western powers over Ukraine shouldn't drive a return to big tech names, which carved out a safe-haven reputation during the pandemic.

"While geopolitics could flare up into month end... we do not expect this to last, and call for risk-on internals to resume into spring."

© 2024 Thomson/Reuters. All rights reserved.


StreetTalk
Tech-dominated "growth" stocks are still not cheap despite some sharp falls over the last six months, analysts at U.S. investment bank JPMorgan cautioned on Monday.
faang stocks, big tech, stock valuations, price to equity
345
2022-19-21
Monday, 21 February 2022 02:19 PM
Newsmax Media, Inc.

Sign up for Newsmax’s Daily Newsletter

Receive breaking news and original analysis - sent right to your inbox.

(Optional for Local News)
Privacy: We never share your email address.
Join the Newsmax Community
Read and Post Comments
Please review Community Guidelines before posting a comment.
 
Get Newsmax Text Alerts
TOP

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved
NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved