Investing.com — UBS raised its 2026 earnings growth forecast for Eurozone equities to around 15% from 8% for the and 11% for broader Eurozone indices, citing a strong and increasingly broad earnings cycle following second-quarter results. It retained its 15% forecast for 2027.
With most companies having reported, earnings were growing by around 22% year over year, or roughly 11% excluding energy, compared with 12% growth in the first quarter.
UBS said cost discipline remained an important support for margins, while revenue growth should increasingly contribute as manufacturing improves, currency headwinds fade and operating leverage strengthens.
The improvement extended across sectors, with UBS expecting all sectors to grow profits this year. Financials were reaccelerating as loan demand and capital markets activity improved, while industrials benefited from investment in AI, electrification and defense, alongside better cyclical trends in areas such as automation.
UBS upgraded European information technology to Attractive after a recent correction, saying valuations were no longer stretched and renewed earnings momentum provided support as AI-related semiconductor capital spending expectations rose.
The broker said the breadth of analysts’ earnings revisions had strengthened to its highest level in three years, while global manufacturing PMIs had recovered into the low- to mid-50s, levels that had typically marked the end of downgrade cycles.
UBS maintained an attractive view on European equities, particularly the Eurozone, and favored banks, industrials, consumer discretionary, health care, information technology and Germany. It said Germany’s fiscal support was a further tailwind.
UBS’s central scenario puts the EuroStoxx 50 at 6,900 in December 2026 and 7,100 in June 2027. Its upside scenario has a June 2027 target of 7,600, while its downside scenario is 4,700.
