Investing.com — Morgan Stanley’s quantitative research team has identified four European stocks that are likely to beat earnings expectations when they report results this month, according to a note dated Wednesday.
The four stocks, namely, , , , and – all carry “overweight” ratings from Morgan Stanley’s fundamental analysts and rank in the top two quintiles of the bank’s Earnings Surprise Composite, a scoring model that draws on three signals: Earnings Forecast Landscape, Earnings Quality, and Broader Forecast Dynamics.
Next scored highest on the composite at the 97th percentile, with its earnings report expected on March 24. The UK-based retailer, which trades at £13,235 on the London Stock Exchange and carries a market capitalization of $21.6 billion, scored particularly high on Broader Forecast Dynamics, hitting the 98th percentile on that measure.
Prudential plc, also London-listed and valued at $36.2 billion, ranked second with a composite score at the 90th percentile ahead of its expected March 17 results.
Italy’s Assicurazioni Generali, which Morgan Stanley also flags as a top pick, scored at the 84th percentile and is set to report on March 12. The insurer trades at €34.9 on the Milan exchange and has a market cap of $62.5 billion.
Endeavour Mining rounds out the list with a composite score at the 81st percentile and an expected reporting date of March 5. The miner, listed in London at £5,185, is notable for a perfect score of 1.00 on the Earnings Quality component, according to Morgan Stanley.
The brokerage’s Earnings Surprise Composite has posted a pre-cost Sharpe ratio of 0.92 for Europe since its live launch in 2024. Going back further to 2019, including the period before live deployment, the strategy achieved a pre-cost Sharpe ratio of 0.71 for Europe.
Since the start of 2025, the European version of the strategy is up 19.0%, Morgan Stanley said. The strategy’s maximum drawdown for Europe in the live period stood at -8.6%, with a Calmar ratio of 1.24 and a Sortino ratio of 1.31, per the note.
Morgan Stanley also identified nine European stocks it views as likely to disappoint on earnings. Those stocks, which include , , Lindt, and , among others, carry “underweight” or “equal-weight” ratings from the bank’s analysts and fall in the bottom two quintiles of the composite score.
ENEL scored lowest among that group, with a composite percentile of 0.09, while Infrastrutture Wireless Italiane SpA ranked last overall at 0.02.
The brokerage noted it assumes no trading in months when few stocks are expected to report, which means there is no US trading in March under the strategy, while European trading continues.