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Investment bank Jefferies has announced its top stocks related to key themes such as innovation, new products and emerging markets. The table below shows five of the “top picks” with the greatest upside potential. Prudential, a UK-listed life insurance company with a focus on Asia, has seen a strong recovery in sales, with annual premiums in the first nine months of 2023 falling compared with pre-pandemic levels in 2019, according to Prudential Jefferies. It is said that the price has increased by 40%. Analysts at the bank believe Prudential will continue to gain market share amid economic uncertainty in mainland China. Meanwhile, Prudential’s new chief executive Anil Wadhwani said the company, which has been hit hard by the Chinese government’s zero-corona virus policy, will diversify into India and Africa. The investment bank expects Prudential shares to rise 118% over the next 12 months to 18,000 pence. UK stocks are normally priced in pence, with 100 pence equaling 1 British pound ($1.27). Alibaba Chinese e-commerce giant Alibaba has been named to Jefferies’ latest list of Global Best Ideas. The company recently announced organizational changes under new group CEO Eddie Wu. Jefferies analysts said in a Jan. 30 note to clients that Wu taking over leadership of Alibaba’s Tmall and Taobao platforms will help the Chinese company “develop synergies and “We will promote AI innovation.” The investment bank expects Alibaba’s Hong Kong-listed shares to rise to HK$128 ($17), suggesting 84% upside potential. The bank expects the U.S.-listed stock to rise to $133 per share, 85% above the current share price. HSBC Jefferies analyst Joe Dickerson believes HSBC stock could be revalued from its current low valuation of 0.9 times tangible book value. The analyst expects HSBC to maintain a return on tangible equity of 15-16% in 2024-2025, delivering significant capital returns to shareholders. Dickerson said the pending sale of HSBC’s Canadian operations also paves the way for the special dividend. Jefferies estimates that HSBC’s total shareholder dividends, covered by its earnings power, will reach $54 billion by the end of 2025. The investment bank expects the stock to rise 57% over the next 12 months. ASML Semiconductor equipment maker ASML is also a Jefferies Top Pick. The bank expects ASML’s revenue to accelerate by 25% in 2025 as a cyclical recovery is underway in the memory and chip sectors. Jeffries believes concerns about U.S. export restrictions on sales to China are overblown. The investment bank believes ASML’s current valuation of 33 times future earnings is too low, as it expects its profits to grow 49% over the next two years. Shares of medical device maker DexCom are expected to rise 33% over the next 12 months, Jefferies said. Analysts at the bank cited Dexcom’s growing overall market potential in diabetes treatment as part of the reason for their bullish stance on the stock, dismissing concerns about the impact of growth in anti-obesity drugs. “The diabetes market remains large and has low penetration. The denominator is so large (and growing) that the progression of diabetes may even improve somewhat.” [the anti-obesity drugs] Treatments are unlikely to eliminate future opportunities [continuous glucose monitoring devices]There may even be a tailwind,” the bank said in a note to clients. —CNBC’s Michael Bloom contributed reporting.
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