Outlook-related sentiments rise in 2021 as companies focus on M&A and ESG, says GlobalData

A year and a half since the onset of the COVID-19 pandemic, which saw a sharp fall in outlook-related sentiments in earning transcripts, companies are now starting to recover and ‘outlook’ sentiments have been rising in 2021 despite the prolonged crisis, says GlobalData. The company’s Filing Analytics platform found that, among the many themes discussed in earnings transcripts around a company’s outlook, COVID-19 and geopolitics were top of the list in 2021, while mergers and acquisitions (M&A) and ESG-related theme mentions were also prominent.

Rinaldo Pereira, Business Fundamentals Analyst at GlobalData, comments: “A reduction in macroeconomic pressures, coupled with positivity around M&A as a growth strategy, have driven outlook-related sentiments, with companies focusing on improving or maintaining their market position. Optimism around digital themes and a shift in consumer and investor interests towards ESG-related corporate performance also drove sentiments.”

Firms are now focused on discussing M&A and ESG-related strategies for respective outlooks and forecasts. Among the outlook-related mentions, discussions around macroeconomic pressures have decreased in Q2 2021, compared to the highs of Q2 2020. On the other hand, outlook sentiments have improved since July 2020.

Pereira adds: “What is interesting about the outlook mentions is that discussions around ‘Market Position’ also rose in H1 2021 compared to H2 2021. Companies may look at M&A to gain market share and diversify product offerings, while also focusing on an end-to-end ESG value chain. That said, there is still a cloud of uncertainty over the outlook, as the rapidly spreading Delta variant poses a threat to companies’ financials.”

Digitization during the COVID-19 era has pushed companies to focus on key technologies while looking at M&A. In a recent comment, Snigdha Parida, analyst for Thematic Research at GlobalData, suggests that themes such as digital media and cloud are likely to make waves across sectors.

Pereira concludes: “Supply chain risk-related mentions have also emerged in 2021. Transportation issues and shortages continue to affect manufacturing in several parts of the world, and GlobalData expects the shortage to last until 2022. However, positive momentum towards domestic supply and integration of ESG in supply chains is the way forward for several corporations.”

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