(Bloomberg) -- Omicron’s arrival may have lifted healthcare stocks and hobbled shares of travel companies, but as the dust settles analysts are sounding a note of cautious optimism. 

Defensive pandemic plays roared back at the end of last week as news of the potentially more transmissible coronavirus strain sent markets into a nosedive amid thin Thanksgiving trade. Top Glove Corp., the world’s biggest glove maker, and Moderna Inc. surged, while airlines took a beating.  

But with early reports fanning speculation the new strain may prove no more lethal than previous variants, some strategists recommend using the rout to load up on battered names. Others say that while the time for bottom-feeding may not have arrived, investors should at least sit tight. 

Here’s a wrap up of their recommendations: 

UBS Wealth:  

  • “We advise against hasty shifts in investment strategy and recommend staying invested,” wrote UBS Global Wealth Management strategists led by Mark Haefele.
  • The healthcare industry can be a defensive and growth play, and valuations look reasonable.
  • Hedge fund and private equity strategies may be able to outperform. Or at least, have less risk of a sharp selloff than equities.

BlackRock Investment Institute

  • Stay invested for now, still favor equities, says Jean Bovin, head of BlackRock Investment Institute, adding that all that would change if vaccines or treatments were to prove futile against new variant.
  • “Omicron could trigger growth downgrades, worsen risk sentiment and hit services sectors, especially in the near term.”
  • “If they are effective, the new strain only delays the restart, and we don’t see it changing the otherwise solid picture for equities: a powerful restart and the prospect of continued low real rates.”
  • “Less growth now means more later.”

Eric Sturdza Investments

  • “You do need to have a barbell approach with a small bucket of Covid-winners and a small bucket of Covid-losers,” said Ludovic Labal, portfolio manager of the Strategic Europe Quality Fund at Eric Sturdza Investments. “Those two have to basically offset each other.”
  • Avoid airlines because of travel restrictions. Likes Logitech International S.A. because of work-from-home trends.

HSBC Global Research

  • “We should remember that volatility spikes to levels seen late last week are often reversed and present decent entry points,” wrote strategists led by Max Kettner.
  • Focus on relative value bets outside the news flow. The weak performance of European large-caps versus the U.S. could see a reversal.

Kingswood Capital Management

  • “We plan to retain our small overweight to equities but are not actually buying the dip,” said Rupert Thompson, chief investment officer at Kingswood Capital Management.

Bantleon Bank AG

  • Still in “wait and see mode,” said portfolio manager Oliver Scharping. But “for now, we hold on to a strong overweight in the broader energy complex and inflation-sensitive sectors,” he said.
  • Merger arbitrage has evolved and adapted to a remote-M&A world, while SPACs have gone “from niche to mainstream.”

eToro

  • Risk-reward is difficult for work-from-home stocks, with earnings about 40% above pre-crisis levels and valuations near 30 times forward P/E, according to Ben Laidler, global markets strategist.
  • “Reopening stocks are attractive, from airlines to hotels. Expectations are low and virus fears will ease. Earnings are still 65% below pre-crisis levels overall.”

Carmignac 

  • Net equity exposure hasn’t been lowered, according to Kevin Thozet, an investment-committee member. Covid uncertainty is offset by low real rates, as well as robust U.S. consumer spending and employment trends.
  • They have a low exposure to reopening trades or travel.

Adams Funds

  • “Should there be concern? Of course. But what we saw on Friday was a significant amount of algorithm trading, not fundamental,” said Mark Stoeckle, chief executive officer and senior portfolio manager
  • Investors “will continue to reward technology stocks that have proven their ability to generate significant revenue and cash flow growth.” Such companies will “prove much more durable than the more high valuation stocks.”

Kingswood

  • “We plan to retain our small overweight to equities but are not actually buying the dip,” said Chief Investment Officer Rupert Thompson. Markets are still near their highs, while the new strain and concern about Fed tapering make the near-term outlook “quite uncertain.”
  • Medium-term, “we don’t believe Omicron changes the outlook materially. If necessary, the mRNA vaccines should be able to be tweaked within a few months and any further restrictions imposed in the meantime are unlikely to derail the global recovery.”

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