The Swiss bank upgrades its UK equities outlook but maintains a neutral stance on the market due to limited secular growth opportunities.
UBS has increased its earnings growth forecast for UK equities to 16% this year, up from 11%, driven by strong first-half profits and improving second-quarter results. The revision reflects high commodity prices earlier in the year and broader sector performance.
Despite the upgrade, UBS retains a neutral rating on the UK market, citing better growth prospects in regions tied to manufacturing recovery or themes like AI and electrification. The bank expects earnings growth to decelerate to 9% by 2027 as commodity prices soften and comparisons become tougher.
UBS targets the FTSE 100 at 11,200 by December 2026 and 11,500 by June 2027, up from 10,825 in mid-August. It favors sectors including banks, industrials, consumer discretionary, and healthcare, while describing valuations as reasonable at 12.7 times forecast earnings.