UBS eyes over 50% upside from these European stocks
European earnings are “finally improving in a meaningful way,” UBS has said, as it named its top picks for the continent as earnings season gets underway. The investment bank notes a “firmer and more dependable earnings backdrop than in recent years” and said it expects growth in earnings-per-share and sales as busy earnings season, fiscal programs and domestic investment get underway. “Europe’s multi-year commitment to upgrading its grids, clean-power capacity and infrastructure provides a durable foundation for sectors exposed to this spend,” analysts wrote in a Jan. 26 note. “With Europe still valued at a meaningful discount to the US, the combination of better earnings delivery and attractive starting valuations offers a more constructive risk-reward profile than we have seen for some time.” It sees five stocks with 50% upside or higher on its price targets. Here they are, in order: HelloFresh – 94.24% upside UBS analyst Jo Barnet-Lamb wrote that HelloFresh is set for a “tough transition period,” but said that growth is on the horizon. The food delivery company has cost control at its core, she said. The investment bank previously had a Neutral stance on the name due to “unknowns around when revenues would stabilise, and around cost control/how painful rightsizing the business would be.” It now rates it as Buy. “We have consistently argued there was a profitable business within [HelloFresh Group],” Barnet-Lamb added. HelloFresh’s fiscal year 2025 results are expected on March 18. Trustpilot – 75.23% UBS’ Hai Huynh sees significant upside with “mid-to-high teens top-line growth, a scalable SaaS model, potential to double margins over time, and strong cash generation and a clear willingness to return excess funds to shareholders.” Shares are down on “misunderstood narratives,” but the stock could be buoyed by AI, data monetization, and no direct competition, Huynh wrote. Investors will be watching out for its fiscal year 2025 results on March 17. EasyJet – 66.01% EasyJet , which files its full-year results on Jan. 29, is a “well capitalised company with an investment grade balance sheet,” according to analyst Jarrod Castle. UBS expects growth in both the airline’s aviation passenger volumes and package holidays, which should drive profit. “Nevertheless, we see the UK economic backdrop and intense capex programme as a drag for investors,” Castle added. Relx – 56.45% Media names have struggled lately, with Stoxx Europe 600 Media price index down 20% over the past 12 months, but Relx’s data and analytics services have earned it a Buy rating from UBS. Barnet-Lamb said it is one of the “few stocks in Europe that we think offers structural growth, a low asset beta, high liquidity, a healthy balance sheet and short-term earnings upside potential.” UBS believes it will benefit from generative AI, which will accelerate its organic growth, Barnet-Lamb wrote. Its latest filings, for fiscal year 2025, are expected on Feb. 12. Alcon – 50.36% UBS expects Alcon , which produces eyecare products for both surgical and consumer uses, to see the highest growth in its sector in 2026 at 7% organic growth. “We believe this type of growth is made even more compelling by its drivers, which are numerous across a diversified portfolio, with products worth half of revenues set to be replaced or refreshed in the next 2-3 years,” said UBS analyst Graham Doyle. Its fourth-quarter results are expected Feb. 25.
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