(Finance) – The market shareholder iitalian (prices as of July 12, 2024) hrecorded a positive performance of 0.7% in the last month and is up 13.5% on an annual basis. The FTSE Italy Mid-Cap index (+2.0%) explains Andrea Randone, Head of Mid Small Cap Research at Intermonte – outperformed the main index by 1.2% in the last month (-3.6% on a relative annual basis), while the FTSE Italy Small Caps index (+0.4%) underperformed the market by 0.3% and is still down -10.3% on a relative basis since the beginning of 2024. Looking at the performance of mid/small caps in Europe, the MSCI Europe Small Caps index rose by 5.5% in the last month, outperforming Italian mid small caps.
From the beginning of 2024, we have implemented a -3.1%/-2.5% revision to our 2024/2025 EPS estimates; focusing on our mid/small cap coverage, however, we have reduced the EPS for 2024/2025 of -1.3%/-2.1%. In particular, in the last month the revision of estimates on large caps has been slightly negative, while it has been negligible for mid caps due to the lack of a relevant news flow. In this sense, the next few weeks will be significant as we enter the heart of the first half financial reporting season.
If we compare theYtD performance with the change in estimates for the 24 financial year in the same period, we see that FTSE MIB stocks have recorded a YtD re-rating of 17.2% (the same parameter was +9.9% a month ago); mid-caps have appreciated by 9.3%, while small caps by 22.9%. On a P/E basis, our panel is trading at a premium of 27% compared to large caps, well above the historical average premium (17%), but slightly below the level of a month ago (29%).
Looking at the performance of the official Italian indiceswe note that the liquidity of large caps in the last month (measured by multiplying average volumes by average prices over a given period) is higher than 13.3% compared to the same period a year ago and is up 19.1% year-on-yearThe picture is similar for mid/small caps: Specifically, liquidity for mid-caps is up 19.3% year-over-year, while for small-caps it is up 16.8% year-over-year. Notably, liquidity has remained quite positive over the past month, thanks also to an easy comparison.
Quarterly results season sto start with and macro signals, such as those on industrial production, concludes Randone – “suggest that a slight slowdown is underway both in the US and in Europe. Therefore, the direction of the estimates should remain slightly negative also in the coming weeks. In this context, we confirm our preference for stocks with a good generation of cash and exposure to solid international trends. Again, we believe the “digital enablers” subgroup could benefit from a rather resilient outlook. The liquidity picture remains challenging for small and mid-caps, but with some progressive signs of improvement compared to the recent past. The launch, expected by the end of the year, of a fund sponsored by Cassa Depositi e Prestiti, could represent a significant catalyst for Italian mid/small caps. The fund would have approximately €1 billion of initial endowment, 49% financed by CDP and 51% by private investors, including pension funds, insurers and asset management companies. The fund’s investment parameters would be similar to those of PIR funds, with a focus on medium/small capitalization issuers”-