When Analyst Picks Fail the Market Test: Lessons from H1 2025

In the first half of 2025, Nigeria's equities market defied expectations, as several stocks delivered stellar performances despite conservative or negative ratings from Capital Market Operators (CMOs).

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The divergence between analyst recommendations and actual market outcomes has raised questions about the accuracy of traditional equity forecasts and the evolving dynamics shaping investor sentiment. While CMOs typically guide investment strategy through “Buy,” “Hold,” and “Sell” recommendations, the results from the past six months suggest that these ratings often missed key inflection points in stock performance.

What stood out most in the period under review was not only how certain stocks outperformed expectations, but also how several investor-favored picks faltered, even after receiving optimistic endorsements. The market's behavior throughout H1 2025 has thrown a spotlight on the complexities of price movements, the growing influence of macroeconomic events, and the need for investors to look beyond analyst notes when making buy or sell decisions.

The banking, consumer goods, insurance, agriculture, oil and gas, ICT, and industrial sectors all experienced moments of disconnect between analyst sentiment and price action. In many cases, CMOs seemed overly cautious or overly optimistic-failing to fully anticipate investor reactions or broader market movements influenced by factors outside company control.

Nowhere was this disconnect more visible than in the banking sector, where some of the country's top-rated stocks failed to deliver.

In the case of Access Holdings (ACCESS-CORP), First Bank Holdings (FIRSTHOLDCO), and FCMB, all three received a wave of "Buy" ratings in the early part of the year. This suggested a strong vote of confidence from analysts who believed that the banks were fundamentally sound, attractively priced, and well-positioned to benefit from regulatory support. Yet, rather than climbing, their share prices slumped. Access Holdings fell by 7.34%, First Bank Holdings dipped by 7.31%, and FCMB declined by 1.60% over the first six months of the year.