Investing.com – Citigroup is looking at European stock markets ahead of the second half of the year.
The bank forecasts modest upside for the benchmark index of +3% for the rest of the year, with upside likely driven by relatively robust earnings per share growth.
Continued improvement in the eurozone economy has led the bank’s analysts to upgrade European 2024 EPS growth to +8%, slightly above bottom-up consensus, and forecast EPS growth of +10% in 2025.
“The European market therefore appears ‘fairly valued’ but upside remains possible if earnings continue to rise,” Citi said.
US Bank has a mid-’25 price target for the Stoxx 600 of 580, implying +11% upside and 2025 EPS growth forecast of +10%.
“Macro risks appear more balanced than earlier this year, but we continue to be encouraged by the impact of earnings trends and macroeconomic conditions,” Citi said.
“We are tilting our European industry strategy towards growth. Our main overweights are technology, industrials and healthcare. We continue to be more cautious in autos, utilities and telecoms,” the bank added.
Key risks include contracting global markets, persistent inflation and geopolitics.
At 05:15 ET (0915 GMT), the Stoxx 600 index fell 0.3% to 520.48.