UBS names its top-conviction picks for the rest of 2023

As several macro overhangs weigh on the markets, UBS named its most compelling plays for the rest of 2023. Investors have been worried about a possible recession, while U.S. lawmakers are working to secure a debt ceiling deal as June 5, a projected date when the country could default, inched closer. The bank’s North American analysts highlighted the buy-rated stocks for which their outlook is uniquely differentiated from the Street. Take a look at some of their picks — and where they may be headed in the coming months. Meta is one of UBS’s top picks. The bank’s base case sees 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 to continue to drive ROAS back from pre-IDFA lows,” UBS’ Joseph Parkhill wrote in a Tuesday note. “We also expect adoption of newer formats like Reels as well as recommendations powered by Meta’s AI discovery engine to boost user engagement level across its platforms,” Parkhill added. Meta shares have surged more than 117% year to date amid numerous cost-cutting measures, which CEO Mark Zuckerberg termed as the company’s ” year of efficiency .” Pharmaceutical giant Eli Lilly is another stock UBS thinks can outperform during uncertain times. The firm has a price target of $498 on the stock, implying 17% upside from Friday’s close. UBS thinks the company’s weight-loss drug Mounjaro is “currently underappreciated,” noting: “We expect Mounjaro, the base business, and pipeline to drive a 5yr top and bottom line CAGR of 16% and 29%+, respectively.” The bank added that, “Beyond Mounjaro, LLY has a robust pipeline including late-stage Alzheimer’s asset donanemab and promising next-generation obesity/T2D assets.” Shares are up 16.4% in 2023. The stock has rallied more than 35% over the past 12 months. LLY YTD mountain LLY Energy infrastructure company Sempra is also one of UBS’s highest conviction call. The bank’s analysts think Sempra is less exposed to recession downsides than other companies in the utilities sector. UBS thinks the company 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. Shares could rally almost 26%, according to the analyst price target. –CNBC’s Michael Bloom contributed to this report.