(Recasts; adds strategist's comments)
Oct 6 UBS strategist David Bianco cut his
12-month price target on the Standard and Poor's 500 Index
.SPX to 1500 from 1650 on fears of a deeper recession from
financial-system strains choking credit availability to the
Bianco also suspended his 2008 year-end target of 1550 on
the index "owing to its proximity amidst extreme uncertainty
Bianco slashed his 2008 earnings outlook for the index to
$74 a share from $80 a share on increased financial asset
write-downs and difficult consumer and other macroeconomic
conditions in the second half of the year.
But he added that the S&P 500 index is significantly
oversold and appreciation from current levels is likely by
early next year even with greater-than-normal investor risk
"Provided the financial system and credit availability
improve over the next several months, the economy should
stabilize and non-financial EPS should be better than feared.
2009 financial earnings per share should surge without
write-downs," Bianco wrote in a note to clients.
"Consumer Staples remain our preferred defensive sector and
in general cash-rich Big-cap, Internationally diversified,
Growth companies," he said.
Within the index, Bianco raised the healthcare sector to
"equal weight", and cut the consumer discretionary sector to
Bianco rated the energy, technology and industrial sectors
"over weight", and the financials, materials, and consumer
staples sectors "equal weight."
He rated telecommunication services, and utilities "under
(Reporting by Adheesha Sarkar in Bangalore; Editing by Pratish