Are these 2 FTSE 100 shares a buy? Major broker UBS thinks so!

Mark David Hartley is considering the growth potential of two FTSE 100 shares after the Swiss bank raised its price targets.

| More on:
Cheerful young businesspeople with laptop working in office

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

When Swiss multinational investment bank UBS puts in a ‘buy’ signal on FTSE 100 shares, it pays to listen. With $3.96trn of assets under management, the 162-year-old institution is the largest private bank in the world.

Recently, UBS raised its price target on two companies I like, Aviva (LSE:AV.) and BAE Systems (LSE:BAE). One of these I already own and I think the other is rapidly becoming too good to ignore.

Let’s look at their financials to see what the fuss is about.


UBS raised its target price for Aviva from 515p to 555p on 11 March. At the time, it noted Aviva’s “high return on capital, diversified business mix and upside potential relative to expectations“.

The upgrade follows positive 2023 full-year results released on 7 March 2024, reporting a positive net income of £1.09bn – up from negative £1.19bn in 2022. Another key development that likely influenced the upgrade is Aviva’s agreement to acquire Bermuda-based insurance firm Probitas Holdings for £240m.

The new target represents a 16.5% increase from the current price of 472p. That’s notably higher than the average 12-month analyst price target of 495p — a meagre 3.8% increase. 

Far be it from me to doubt UBS but I’m interested to know why it’s so confident in such a high price target. Particularly considering that since early 2022, Aviva’s debt-to-equity (D/E) ratio has steadily increased from 37.8% to 66.4%. That’s still in a safe range but I’d rather it was going down than up.

Still, with a solid balance sheet and a reliable 7% dividend yield, I do see the potential value in Aviva. I’ve been considering the company for some time now, so I’ll take this UBS upgrade as a sign that it’s now time to buy. 

BAE Systems

Also on 11 March, UBS raised its target price for BAE Systems by 14% from 1220p to 1450p.

BAE Systems has been a favourite of mine for a while now. I’ve spoken in the past of its growth potential as a key supplier to government defence agencies. More recently, though, I’ve felt it could be overvalued and set for a correction.

With UBS now indicating otherwise, I’m checking the charts to get a better idea.

When trying to gauge a stock’s growth potential, I often look at its relative strength index (RSI). This allows me to get a quick idea of where the price might be headed. 

Let’s look at the orange circles on the graph below. 

BAE Systems share price vs RSI

FTSE 100 company BAE Systems RSI
Created on

Whenever the RSI goes above 70, the share price tends to dip soon after. With the RSI floating close to 70 for most of this year, I’m wondering how much further the BAE share price can climb. A similar pattern emerged in late February and March last year, with the price topping out in late April before correcting.

So, yes, the share price could still have some gas in the tank. And with UBS onboard, I’m certainly more inclined to hold than sell for now.

But I’ll be keeping a close eye on that RSI.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Mark Hartley has positions in BAE Systems. The Motley Fool UK has recommended BAE Systems. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Young Black man sat in front of laptop while wearing headphones
Investing Articles

Investing just £10 a day in UK stocks could bag me a passive income stream of £267 a week!

This Fool explains how investing in UK stocks rather than buying a couple of takeaway coffees a day could help…

Read more »

Investing Articles

A cheap stock to consider buying as the FTSE 100 hits all-time highs

Roland Head explains why the FTSE 100 probably isn’t expensive and highlights a cheap dividend share to consider buying today.

Read more »

Investing Articles

If I were retiring tomorrow, I’d snap up these 3 passive income stocks!

Our writer was recently asked which passive income stocks she’d be happy to buy if she were to retire tomorrow.…

Read more »

Investing Articles

As the FTSE 100 hits an all-time high, are the days of cheap shares coming to an end?

The signs suggest that confidence and optimism are finally getting the FTSE 100 back on track, as the index hits…

Read more »

Investing Articles

Which FTSE 100 stocks could benefit after the UK’s premier index reaches all-time highs?

As the FTSE 100 hit all-time highs yesterday, our writer details which stocks could be primed to climb upwards.

Read more »

Investing Articles

Down massively in 2024 so far, is there worse to come for Tesla stock?

Tesla stock has been been stuck in reverse gear. Will the latest earnings announcement see the share price continue to…

Read more »

Young Caucasian woman with pink her studying from her laptop screen
Dividend Shares

These 2 dividend stocks are getting way too cheap

Jon Smith looks at different financial metrics to prove that some dividend stocks are undervalued at the moment and could…

Read more »

Investing Articles

Is the JD Sports share price set to explode?

Christopher Ruane considers why the JD Sports share price has done little over the past five years, even though sales…

Read more »