RBC Capital Markets has upgraded the Utilities sector to “>
Overweight”, highlighting its defensive strength and promising performance outlook. In contrast, the Energy sector receives a downgrade to “Market Weight”, reflecting strategic adjustments needed in response to market conditions.

Rationale Behind the Upgrade

1. Constructive Performance Outlook
   • Analysis from RBC’s US Utilities team indicates a positive performance trajectory compared to other sectors.
2. Positive Earnings Revisions
   • The Utilities sector has consistently exhibited robust earnings-per-share (EPS) and sales growth.
3. Historical Resilience
   • Utilities have outperformed in turbulent market periods, reinforcing their defensive nature.

Reasons for Energy Downgrade

1. Balancing Act
   • RBC has limited the number of Overweight sector ratings, resulting in this strategic move.
2. Mild Analyst Sentiment
   • The Energy sector reflects lower expectations in recent surveys by RBC analysts.

Investors may need to reassess their sector allocations in light of this analysis, using available tools and resources to gauge the performance outlook for both sectors effectively.