As the second half of the year looms closer, Citigroup has turned its attention to the European equity market, offering insights into its outlook.
The bank projects a modest 3% upside for the benchmark Stoxx 600 index by the end of the year, driven primarily by relatively solid earnings per share (EPS) growth.
Citigroup’s analysts have revised their forecast for European EPS growth in 2024 to 8%, slightly surpassing bottom-up consensus. Additionally, they anticipate a 10% EPS growth in 2025, buoyed by continued enhancements in the Eurozone economy.
“The European market appears to be fairly priced, but there is still potential for upside if earnings maintain their positive trajectory,” remarked Citi.
The U.S. bank has introduced a mid-25 Stoxx 600 price target of 580, offering an 11% upside, alongside a forecast of 10% EPS growth for 2025.
“While macro risks seem to be more evenly balanced compared to earlier this year, we are encouraged by the improving momentum in earnings and macroeconomic conditions,” Citi added.
Citi’s European sector strategy leans towards Growth, with key Overweights including Technology, Industrials, and Health Care. Conversely, the bank maintains a cautious stance on Autos, Utilities, and Telcos.
Key risks cited by Citi include the potential narrowing of global markets, persistent inflationary pressures, and geopolitical uncertainties.
As of 05:15 ET (09:15 GMT), the Stoxx 600 experienced a 0.3% decline, settling at 520.48.
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