Rudi's View | 4:23 PM
By Rudi Filapek-Vandyck, Editor
UBS strategist Richard Schellbach has moved his Model Portfolio allocation to a sector Overweight for the ASX-listed healthcare sector.
Healthcare, as investors probably know all too well, has experienced a very uncharacteristic post-GFC period to date, with relative valuations now at their 'cheapest' levels in ten years.
Schellbach believes EPS downgrades for the sector (mostly on margin pressures) have now run their course. Or to put this in his words: downgrades have been "exhausted".
Add the fact that, forward looking, the sector stands out as one of prime locations for EPS growth, while investors have become rather uninterested and apathetic (where once they all wanted to have their slice of ownership), not to mention the prospect of slowing economic growth globally.
The latter prospect traditionally has always placed healthcare back on investors' radar.
No doubt at least partially inspired by the US administration's colourful stance on vaccines (let's call it that, shall we?), UBS's Model Portfolio is now Overweighted the sector through the inclusion of Cochlear ((COH)) and ResMed ((RMD)).
Fun fact; UBS recently upgraded Cochlear to Buy. Something that hadn't been seen since 2021.
Other changes made to the Model Portfolio include Northern Star ((NST)) being replaced by Newmont Corp ((NEM)) while Life360 ((360)) has now been replaced by NextDC ((NXT)). WiseTech Global ((WTC)) is preferred over Xero ((XRO)). Mirvac Group ((MGR)) was added to provide more exposure to the residential housing cycle locally.
Post the sectorial upgrade, UBS's Model Portfolio is now Overweighted Healthcare, Insurance and 'TMT'. The latter acronym was incredibly popular some 25 years ago and stands for Technology, Media & Telecom.
Three segments remain Underweighted: Banks, Energy, and small caps.
UBS remains bearish the US dollar.
(For UBS's latest update on Most Preferred and Least Preferred ASX-listings, see further below).
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Analysts at Wilsons have put the ASX-listed gold sector in the limelight, arguing if the price of bullion at the very minimum holds its ground around the current pricing level, the sector in Australia will see upgrades to forecasts flowing in.
Against this perspective, Wilsons sees the sector as still attractively priced. Wilsons' Model Portfolio remains Overweighted the local gold sector, but has trimmed exposure to Evolution Mining ((EVN)) while also adding Northern Star Resources ((NST)) as a fresh inclusion.
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