Credit Suisse bullish on energy, healthcare

* Credit Suisse targeting energy, healthcare

* Financials, discretionary seen underperforming

* S&P profit margins to peak in 2011

NEW YORK, April 5 (Reuters) – Energy and healthcare are
the sectors to target in coming quarters, Credit Suisse
strategists said on Tuesday, as they expect stocks to come
under pressure as the Federal Reserve’s asset-buying program
nears an end.

The S&P 500 could be weighted down and “we’ll get some
negative pressure” when the Federal Reserve winds down its
$600 billion bond-buying program, said Doug Cliggott, U.S.
equity strategist at Credit Suisse, in a conference call.

Corporate margins on the S&P will hit a peak sometime this
year, he said, but “we do want to be overweight energy,” with
a focus on large integrated oil companies.

The overweight in healthcare is seen as a defensive call,
with focus on pharmaceutical and biotechnology names.

On the other side, consumer discretionary and financials
are expected to underperform.

“Spending on financial services is very weak (which) makes
growing earnings tough,” Cliggott said.

He added that banks’ exposure to residential real estate
is a concern in terms of balance sheet values.


Cliggot said rising oil prices are a threat to the U.S.
and global economic recovery, estimating crude oil at $140 a
barrel would translate into a “very significant” impact on
consumer spending in the United States and other countries.

U.S. oil is near a 2-1/2 year high, trading slightly above
$108 per barrel, while Brent crude is above $122.

A spike above $150 would raise the probability of a
recession “pretty dramatically,” Cliggott said.

In the broader market, the transition of leadership to
large-cap stocks from mid- and small-caps is “on the horizon,”
said Lori Calvasina, small- and mid-cap equity strategist at
Credit Suisse.

She said large-caps have not been this favorably valued
when compared to small- and mid-caps in 30 years.

She said the technology sector weight could be lowered in
the next reconstitution of the Russell 2000 index (.RUT: Quote, Profile, Research),
which could turn small-cap technology holders into sellers.
(Reporting by Rodrigo Campos; Editing by Jan Paschal)

Credit Suisse bullish on energy, healthcare