By Sam Boughedda
UBS analysts updated the firm's top picks on Monday, revealing they have removed Intel (NASDAQ:INTC) from the list and replaced them with Microsoft (NASDAQ:MSFT).
Despite removing Intel from the list, UBS maintained their Most Preferred view for now.
"While we believe the longer-term turnaround story under CEO Pat Gelsinger remains intact, a deeply disappointing set of results and guidance highlights the challenges of the current demand environment and Intel's still difficult competitive positioning and execution. Despite INTC shares potentially offering opportunity for longer-term investors, we do not see the sort of catalysts over the next six months or so that underpin our other Top Picks," UBS said.
They replaced Intel with Microsoft after it recently reported an "overall solid quarter in a challenging environment, highlighting the strength of its recurring revenue model."
"In the near- to intermediate-term, we expect MSFT shares to benefit from their high-quality bias paired with strong fundamentals and a reasonably attractive valuation (P/E) relative to the stock's history and peers," UBS added.
UBS' most preferred sectors are energy and healthcare, while they are Neutral on communication services, consumer staples, financials, industrials, information technology, real estate, and utilities. The firm's least preferred sectors are consumer discretionary and material.