UBS: Southwest Airlines and Eastman Chemical May Outperform After US-Iran Deal
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With a US-Iran memorandum of understanding set to be signed this Friday in Switzerland, UBS has screened for US stocks hit hardest by the conflict, trading at low valuations, and lightly held — names it sees as most likely to outperform once tensions ease.
How did UBS pick these names?
The screen applies five filters at once: lowest score on UBS's qualitative conflict framework (meaning most hurt by the Middle East conflict), underperformance vs. the benchmark since Feb 27, a Buy rating, P/E below historical average, and low crowding.
This means → UBS is betting on a "beaten-down + under-owned" combo — once the overhang lifts, rebound room is wide and crowding risk is low.
UBS's own words: these names "are less crowded than the MSCI USA Index, and therefore more likely to outperform."
Southwest Airlines — why does an airline top the list?
Southwest Airlines is one of the names UBS flagged. Its stock is already up about 15% year-to-date.
Jefferies analyst Sheila Kahyaoglu separately raised her price target from $37 to $44 (Hold rating maintained) after meeting with management, who she said are "increasingly confident" in the outlook.
In plain terms = management's logic: if off-peak demand holds up, sticky fare increases + industry capacity discipline + stable fuel costs together support 2026 EPS above $4.
Eastman Chemical — why is a chemical stock on this list?
Eastman Chemical also appears on the UBS screen. Its stock is likewise up nearly 15% this year.
JPMorgan analyst Jeffrey Zekauskas upgraded the stock from Neutral to Overweight in April, lifting his target from $70 to $80 — implying roughly 6% upside from the current price.
This means → the near-term case rests on improving commodity-cycle earnings; the medium-term case is a durable-goods manufacturing recovery. Zekauskas sees 2026 as a positive earnings inflection and calls the risk-reward profile favorable within chemicals.
Can these stocks actually outperform?
It hinges on two things: whether the US-Iran deal is signed on schedule Friday, and how effectively easing tensions feed through to airline demand and chemical feedstock costs.
In plain terms = the whole screening logic assumes "peace actually arrives." If the deal slips or the terms are diluted, the overhang stays and the rebound thesis has no foundation.
This reflects that current market pricing still embeds a measurable geopolitical risk premium — the deal's signing alone, by compressing that premium, would act as a catalyst.
Content is for reference only, not financial advice.