Key facts
- J.P. Morgan raised its year-end target for the STOXX 600 index to 680 from 630.
- The MSCI Eurozone index target was raised to 420 from 385.
- The firm cited corporate earnings strength and improvements in the geopolitical climate.
- J.P. Morgan reiterated an 'overweight' stance on Eurozone equities.
- Eurozone earnings are expected to grow about 20% in 2026.
J.P. Morgan has increased its year-end price targets for European equity indexes, suggesting that the region could become an attractive investment as geopolitical tensions ease and corporate earnings show strength. The brokerage lifted its target for the benchmark STOXX 600 index to 680 from 630, implying a potential 7% upside from its recent closing level. Additionally, the target for the MSCI Eurozone index was raised to 420 from 385.
Analysts at J.P. Morgan, led by Mislav Matejka, noted that as global markets continue to price out the impact of the Middle East conflict, the Eurozone is poised to benefit. They suggested that Europe could present a 'compelling story' if markets resume this pricing-out process and market breadth improves. The firm reiterated its 'overweight' recommendation for Eurozone equities, anticipating a robust profit recovery with earnings expected to grow approximately 20% in 2026 after a contraction in the previous year.
Factors that could further support European equities include a deeper-than-expected fall in oil prices, lower bond yields, reduced tariffs, and a pickup in China's economy. J.P. Morgan also highlighted that global investors remain underexposed to the region, indicating room for inflows if sentiment improves. Earlier in the month, Barclays had also raised its STOXX 600 year-end target and shifted from a bearish stance.