UBS names its top-conviction picks for the rest of 2023
As the global markets continue to face macro overhangs, UBS has named its top picks for the rest of 2023. The bank’s North American analysts have highlighted the buy-rated stocks for which their outlook is uniquely differentiated from the Street, amid concerns of a possible recession and the need for US lawmakers to secure a debt ceiling deal.
One of UBS’s top picks is Meta, with the bank’s base case seeing revenue growth jumping 13% year over year in 2024, as well as margin expansion of 37%. “We expect Meta to see ad budget share gains as Advantage+ and other ad tech improvements continue to drive ROAS back from pre-IDFA lows,” said UBS’s Joseph Parkhill. Meta shares have surged more than 117% year to date amid numerous cost-cutting measures.
Another stock that UBS thinks can outperform during uncertain times is pharmaceutical giant Eli Lilly. The firm has a price target of $498 on the stock, implying 17% upside from Friday’s close. UBS thinks Eli Lilly’s weight-loss drug Mounjaro is “currently underappreciated,” and that the company’s pipeline will drive a 5-year top and bottom line CAGR of 16% and 29%+, respectively. Shares are up 16.4% in 2023.
Energy infrastructure company Sempra is also one of UBS’s top picks. The bank’s analysts believe Sempra is less exposed to recession downsides than other companies in the utilities sector, and will continue to benefit from the liquified natural gas backlog as European countries look for alternatives to Russian gas. It also believes the company’s diverse projects related to the clean energy transition will increase its growth potential.
FAQs:
Q: What are UBS’s top picks for the rest of 2023?
A: UBS’s top picks include Meta, Eli Lilly, and Sempra.
Q: Why is Meta one of UBS’s top picks?
A: UBS’s base case sees revenue growth jumping 13% year over year in 2024, as well as margin expansion of 37%. The bank also believes that Meta will see ad budget share gains and that adoption of newer formats like Reels and recommendations powered by Meta’s AI discovery engine will boost user engagement levels across its platforms.
Q: Why does UBS think Eli Lilly can outperform during uncertain times?
A: UBS thinks Eli Lilly’s weight-loss drug Mounjaro is currently underappreciated and that the company’s pipeline will drive a 5-year top and bottom line CAGR of 16% and 29%+, respectively.
Q: Why is Sempra one of UBS’s top picks?
A: UBS’s analysts believe that Sempra is less exposed to recession downsides than other companies in the utilities sector, and will continue to benefit from the liquified natural gas backlog as European countries look for alternatives to Russian gas. The bank also thinks that the company’s diverse projects related to the clean energy transition will increase its growth potential.
UBS Lists Its Top-Conviction Picks for the Remainder of 2023
UBS has identified its top stock picks for the rest of 2023 in the face of ongoing market concerns. The bank’s North American analysts have highlighted buy-rated stocks for which their outlook is distinct from that of Wall Street. Companies on the list include social media giant Meta, pharmaceutical firm Eli Lilly and energy infrastructure business Sempra. UBS has forecast that Meta’s revenue growth could rise 13% YoY in 2024, with margin expansion of 37%. Eli Lilly, meanwhile, is believed to be underappreciated and boasts a diverse pipeline that includes a promising obesity/T2D asset. Sempra is predicted to benefit from countries seeking alternatives to Russian gas.