UBS Updates Top Picks

UBS has made notable changes to its top picks across multiple sectors, including financials, energy, and utilities, reflecting expectations for a "soft landing" in the U.S. economy.

Financials Sector

UBS added Bank of America and Truist Financial (NYSE:TFC) to its top picks list. The bank removed Intercontinental Exchange (NYSE:ICE) and Visa (NYSE:V) from its list in favor of banks better positioned to take advantage of interest rate cuts.

UBS believes that Bank of America (BAC) is especially well-positioned to benefit from lower short-term interest rates and an expected soft economic landing. Its diversified business model, which includes consumer credit cards, commercial lending, capital markets, and wealth management, supports its profitability prospects over the coming year.

Truist was also added due to its potential benefit from reduced funding costs in a declining fed funds rate environment. UBS anticipates that Truist will achieve profitability growth over the next 12 months thanks to improved capital allocation and cost management.

Energy Sector

In the energy sector, UBS added Suncor Energy (NYSE:SU), praising its attractive valuation and rapid turnaround under new leadership.

Utilities Sector

UBS included Entergy Corp (NYSE:ETR) and Sempra Energy (NYSE:SRE) in its picks for utilities. They highlighted ETR's reduced regulatory risks and infrastructure opportunities as well as SRE's growth potential through investments in LNG and its Texas operations.

MLPs & Energy Infrastructure

UBS introduced Kinder Morgan (NYSE:KMI), citing its attractive valuation and growth potential linked to rising natural gas demand, driven by AI and data center needs.

Sector Preferences

UBS continues to favor the financials, information technology, and utilities sectors, while listing materials and real estate as the least preferred sectors.