Citi sees 3% upside for Stoxx 600 by year-end

Investing.com - Citigroup takes a look at the European equity market, as the second half of the year approaches.

The bank sees a modest +3% upside for the benchmark Stoxx 600 index into the year-end, with the upside likely driven by relatively solid EPS growth.

Continued improvements in the Eurozone economy have resulted in the bank’s analysts raising 2024 European EPS growth to +8%, slightly above bottom-up consensus, and forecast +10% EPS growth in 2025.

“The European market thus looks ‘fairly priced’, but upside remains possible should earnings continue to deliver,” Citi said.

The U.S. bank introduces a mid-25 Stoxx 600 price target of 580, offering +11% upside, and a 2025 EPS growth forecast of +10%.

“The macro risks look more evenly balanced than earlier this year, but we remain encouraged by inflecting earnings momentum and macro conditions,” Citi said.

“We tilt our European sector strategy towards Growth. Our main Overweights include Tech, Industrials and Health Care. We remain more cautious on Autos, Utilities and Telcos,” the bank added.

The key risks include global markets narrowing, sticky inflation, and geopolitics.

At 05:15 ET (09:15 GMT), the Stoxx 600 fell 0.3% to 520.48.

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