UBS Unveils High Conviction Picks with 90% Upsides

Key Takeaway

• UBS's high conviction picks include GSK, Infineon Technologies, and Just Eat Takeaway, with the latter projected to see a 91% price increase.
• EasyJet is highlighted for a 51% potential upside due to expected recovery to pre-pandemic levels and favorable market conditions.
• The selections span various sectors, indicating diverse investment opportunities in pharmaceuticals, semiconductors, consumer services, and transportation.

UBS High Conviction Picks Unveiled

UBS has recently shared its high conviction buy ideas, spotlighting stocks across Europe, including the U.K., and the Southeast Asian region that it believes are set to significantly impact investors' portfolios. Among the European selections, UBS highlighted British pharmaceutical giant GSK, German semiconductor company Infineon Technologies, and U.K. tobacco firm Imperial Brands as "high quality value buy" names. For Southeast Asia, the bank's picks include petroleum producer PTTEP and conglomerate SM Investments. These selections are part of UBS's latest recommendations, aiming to guide investors towards potentially lucrative investments.

Top Picks with Notable Upsides

In its detailed analysis, UBS assigned the highest potential upside to Dutch online food delivery company Just Eat Takeaway, projecting a 91% increase to its price target. UBS attributes this optimism to the company's efficient delivery logistics and strong market position in the U.K., supported by investments in logistics, grocery, and restaurant choice. British airline EasyJet also stands out with a 51% potential upside, as UBS anticipates a return to pre-pandemic traffic volumes and profit growth driven by favorable fuel prices and an expanding holidays business. Additionally, Infineon Technologies is recognized for its potential 29% upside, with UBS expecting the semiconductor firm to achieve over 10% growth, buoyed by increasing electric vehicle penetration and a focus on energy efficiency.

Sector-Specific Insights

UBS's analysis extends to various sectors, underlining the diverse nature of its high conviction picks. The bank's positive outlook on Just Eat Takeaway reflects the potential in consumer services, while EasyJet's anticipated recovery highlights opportunities in the transportation sector. Infineon Technologies represents the semiconductor industry's growth prospects, attributed to technological advancements and increasing demand. Furthermore, UBS's confidence in GSK underscores the pharmaceutical sector's potential, driven by a shift towards newer HIV drugs and vaccines for older adults.

Street Views

• UBS Analyst for Just Eat Takeaway (Bullish on Just Eat Takeaway):

  "The firm is enjoying a 'substantial self-help opportunity' through the rising efficiency of its delivery logistics... We see a substantially undervalued core business composed of the visibly high quality Northern European segment and the more debated UK&I segment, which we believe to be at an inflection point in its competitive trajectory and poised for substantial profit over delivery."

• UBS Analyst for EasyJet (Bullish on EasyJet):

  "EastJet traffic volumes are expected to recover to pre-pandemic levels of 2019, which it says should continue to generate higher profits for the group... We think profits can still grow on the back of a benign fuel price, profitable volume additions at the airline and a material increase in the profitability from the holidays business."

• UBS Analyst for Infineon Technologies (Bullish on Infineon Technologies):

  "We have long believed Infineon has the capacity to outperform the sector and deliver high-single-digit through-cycle growth, supported by rising EV penetration and the growing importance of energy efficiency benefiting other parts of the business... It says Infineon enjoys 'some of the most compelling structural growth drivers' in the sector as a leader in power semiconductors — and is set to grow faster than its peers."

• UBS Analyst for GSK (Bullish on GSK):

  Citing a greater shift to newer HIV drugs and “associated positive mix shift” to older adult vaccines.