UBS is shaking up its list of top stock ideas for next year.

“We believe 2023 should bring inflection points for inflation, interest rates and economic growth while financial markets deal with a complex geopolitical backdrop,” UBS’ global equity team wrote in a note.

The global, bottom-up stock list represents the “highest conviction stock ideas benefiting from opportunities opened by these inflections, while incorporating dynamically tactical ideas.”

The benchmark is the MSCI All Country Word Index (NASDAQ:ACWI). There are six additions and five deletions and one slot open.

“To better reflect the forward-looking nature of our equity preference approach, we renamed the former ’22 for ‘22′ theme and equity selections in November 2022 to ’23 for ‘23′,” UBS said. “The investment philosophy and underlying stock selection methodology stays unchanged.”

The list has a defensive positioning and is underweight U.S., overweight U.K. underweight Info Tech (XLK) and overweight Energy (XLE).

The additions:

1. AbbVie (ABBV) – “We believe the market is over penalizing ABBV for the expected decline to its leading Humira franchise – as biosimilars launch in 2023 in the US – and underappreciates ABBV’s growth potential from its diverse product mix.”
2. Alexandria Real Estate (ARE) – The “company has a strong balance sheet with a well covered dividend, sector-leading margins, and a best-in-class portfolio and management team.”
3. CSPC Pharmaceutical (OTCPK:CSPCY) – “CSPC is aggressively growing its oncology franchise and is one of the few companies developing a second generation mRNA COVID vaccine, which is expected to gain IND approval from the FDA in 2023.”
4. MediaTek (OTCPK:MDTKF) – “Tactically, we expect its inventory levels to decline over the next few quarters and we see improving risk-reward given its beaten-down P/E valuation.”
5. Mercedes-Benz (OTCPK:MBGYY) – “Its order book remains strong and we believe the company is well on track to show further sequential growth in 2022 and beyond, which will likely help the stock to outperform.”
6. Meta Platforms (META) – “The company is now taking steps to be more capital efficient, including reducing headcount, which could be a source of earnings upside through 2023 … We also believe Meta’s lower costs to advertisers may open up the opportunity for ASP increases over time.”

The deletions:

1. ICICI Bank (IBN) – “We remove ICICI to make way for semiconductor exposure instead.”
2. PTT Exploration & Production (OTCPK:PEXNY) – “We remove PTT E&P to reduce our heavy exposure to energy in favor of healthcare, another most preferred global sector.”
3. Reckitt Benckiser Group (OTCPK:RBGPF) – “We remove Reckitt Benckiser to make way for another European consumer stock that even better fits our underlying investment theme 23 for ’23.”
4. Thermo Fisher (TMO) – We “are removing due to concerns about margin pressure in 2023 as COVID testing normalizes and FX headwinds.”
5. Visa (V) – We “remove the name due to concerns that the recovery in cross border volumes could stall and reverse as global economic growth slows and some regions dip into recession.”

Existing names:

1. Airbus (OTCPK:EADSY) – “Following Airbus’s production cuts triggered by the pandemic, we expect the company to ramp up production over the next few quarters.”
2. BAT UK (BTI) – “In our view, BAT should continue to gain market share in its largest market, the US, driven by price and mix. Vapor sales should benefit from recent price increase of its Vuse pods.”
3. CapitaLand Integrated Commercial Trust (OTCPK:CPAMF) – “CICT is a proxy for Singapore’s economic reopening. We believe the improving rent outlook in Singapore’s office and retail sub-sectors should benefit landlords like CICT.”
4. CP ALL (OTCPK:CPPCY) – “We see Asia’s reopening economy as a boon to CP All, with its convenience store business set to recover from depressed sales due to lockdown from the COVID-19 pandemic.”
5. Exxon Mobil (XOM) – “Exxon has regained its competitive strength and operating momentum, in our view. This, along with a strong balance sheet and attractively valued shares, makes Exxon our best idea among US majors.”
6. Glencore (OTCPK:GLCNF) – “In our view it has exposure to several desirable commodities, which benefit from the structural trend for a higher metal content and a lower carbon world.”
7. Johnson Controls (JCI) – “Johnson Controls should benefit from resilient demand trends in non-residential HVAC and building management software despite a supply chain related misstep in FY2Q.”
8. Lockheed Martin (LMT) – We “don’t believe out-year forecasts fully reflect the prospect for higher earnings power driven by rising defense spending from the US and international allies.”
9. Marriott International (MAR) – “Marriott has ample liquidity and will likely begin returning capital to shareholders as travel improves.”
10. Merck (MRK) – “We think with additional pipeline data and resolution to broader drug pricing fears, MRK can trade much closer to its 10-year average valuation.”
11. NextEra Energy (NEE) – “We view NextEra as one of the best positioned utilities in the US, with solid earnings growth and best-in-class operations.”
12. Palo Alto Networks (PANW) – “Longer term, we expect the company to gain share in the highly fragmented cyber security industry due to its differentiated platform and targeted acquisitions, as well as its increasing focus on cloud-based security solutions.”
13. Roche (OTCQX:RHHBY) – “After some disappointments, the market is assigning a low value to Roche’s late stage pipeline, leaving potential for a positive surprise if assets like tiragolimab (cancer) or ganterenumab (Alzheimer’s) deliver positive Phase 3 data.”
14. SLB (SLB) – “SLB, given its international exposure and technological prowess, is set to benefit from a likely multi-year increase in upstream spending on both land and offshore.”
15. TotalEnergies (TTE) – The company “is particularly well positioned for the energy transition and can benefit through its trading capacity, battery and solar technical capabilities, and customer access.”
16. United Overseas Bank (OTCPK:UOVEY) – “It is a beneficiary of regional economic recovery, while the removal of regulatory limits on dividends could be an added catalyst, in our view.”

SA contributor Bohdan Kucheriavyi has a Buy on META, but also says the Metaverse pivot is doomed.