UBS has raised its 2026 earnings growth forecast for Eurozone equities to around 15%, up from prior estimates of 8% for the EuroStoxx 50 and 11% for broader Eurozone indices, while maintaining its 15% outlook for 2027.
With most companies having reported second-quarter results, aggregate earnings grew about 22% year-over-year, or roughly 11% excluding energy, compared with 12% growth in the first quarter. UBS now expects profit growth across all sectors this year, marking a shift from earlier concentration in specific areas.
The financial sector is reaccelerating due to improved loan demand and stronger capital markets activity, while industrials benefit from investment in artificial intelligence, electrification, defense, and better cyclical trends such as automation. European information technology has been upgraded to attractive following a recent correction, supported by more sustainable valuations, renewed earnings momentum, and rising AI-related semiconductor capital expenditure expectations.
The breadth of analysts' earnings revisions has reached its highest level in three years, and global manufacturing PMIs have recovered into the low- to mid-50s, levels typically associated with the end of downgrade cycles. UBS maintains an attractive view on European equities, particularly in the Eurozone, favoring banks, industrials, consumer discretionary, healthcare, information technology, and Germany.
Under its central scenario, UBS targets the EuroStoxx 50 at 6,900 by December 2026 and 7,100 by June 2027, with an upside scenario of 7,600 and a downside scenario of 4,700.
