These stocks have the most to gain from a vaccine, according to UBS analysis

Published Thu, Nov 12 20209:49 AM ESTUpdated Thu, Nov 12 202011:34 AM EST

(This story is for CNBC Pro subscribers only.) UBS said many stocks that rallied on breakthrough news this week about a Covid-19 vaccine have more room to go on the back of the economic recovery. The bank developed a framework to rank stocks with the most sensitivity to major developments on the vaccine front. These names have the potential to lead the market higher in a vaccine-driven rally, UBS said. UBS sees the S & P 500 to hit 3,625 by the end of this year, about 1.5% higher from Wednesday's close of 3,572.66. It said the broad market benchmark will reach 4,100 by the end of 2022, which represents a 15% rally. The bank uses three criteria to screen the companies with "attractive upside" on the recent vaccine news: Stocks in the S & P 900 (S & P 500 + S & P Midcap 400) with a UBS buy rating as well as an upside to price target Stocks in the top 30% sensitivity to major vaccine news Stocks in the top 50% stock price upside return to pre-Covid enterprise values Based on UBS' analysis, airlines, leisure, energy, industrials and banks are most sensitive to vaccine news and have further potential for outperformance, while staples, pharmaceuticals and utilities should see more muted reaction. "With many of the most impacted industries like Energy, Airlines, Hotels and Banks still down well over 30% YTD, the upside to a positive vaccine outcome is considerable, particularly given base effects," UBS strategist Keith Parker said in a note. The bank also noted that small caps are nearly three times more sensitive than their large-cap counterparts on major vaccine news days. The Russell 2000 has risen 5.6% this week, versus a 1.8% gain for the S & P 500. UBS highlighted a number of names in the beaten-down energy sector, including Devon Energy , Pioneer Natural Resources and EOG Resources . "Energy stock prices have fallen by much more than 2022 estimates have, suggesting there is more attractive upside than in Airlines where upside to Jan-Feb EVs after dilution is much less than how much EPS has been downgraded," Parker said. UBS said regional banks like TCF Financial , Regions Financial and Signature Bank could also see big risk-adjusted upside amid the economic recovery.

Small bottles labelled with "Vaccine" stickers stand near a medical syringe in front of displayed "Coronavirus COVID-19" words in this illustration taken April 10, 2020.

Dado Ruvic | Reuters

(This story is for CNBC Pro subscribers only.)

UBS said many stocks that rallied on breakthrough news this week about a Covid-19 vaccine have more room to go on the back of the economic recovery.

The bank developed a framework to rank stocks with the most sensitivity to major developments on the vaccine front. These names have the potential to lead the market higher in a vaccine-driven rally, UBS said.

UBS sees the S&P 500 to hit 3,625 by the end of this year, about 1.5% higher from Wednesday's close of 3,572.66. It said the broad market benchmark will reach 4,100 by the end of 2022, which represents a 15% rally.