UBS and Deutsche Bank Raise Stoxx 600 Targets as Multiple Institutions Turn Bullish on European Equities
Alina Collins
UBS and Deutsche Bank both raised their year-end Stoxx 600 targets; the 18-strategist average now sits at 647 points, less than 1% above current levels, yet only 5 still forecast a decline. This means → the institutional consensus is shifting from cautious to mildly bullish, with the key debate hinging on whether earnings can keep delivering.
Who is turning bullish — and by how much?
UBS strategist Gerry Fowler is the survey's biggest bull, lifting his target to 690 points — implying roughly 8% upside. He admitted he had been "too cautious."
Bank of America and Kepler Cheuvreux also raised their targets, joining the bullish camp.
This means → only 5 out of 18 strategists still expect the index to fall — bears are now a clear minority.
Why are earnings revisions the core support?
Citi's European (ex-UK) earnings-revision indicator has hit a five-year high, with 80% of sectors in net-upgrade territory.
In plain terms = it is not one or two sectors improving — analysts across nearly every industry are marking estimates higher. That breadth is the most persuasive signal.
The market forecasts 14% EPS growth for European companies in 2026 and 10% in 2027. In Q2 earnings season, over 45% of companies beat expectations; the trailing year-on-year earnings growth rate is 11.6%, matching consensus.
ASML — Europe's largest company by market cap — delivered a beat-and-raise quarter, signaling that the heavyweight tech names are underwriting the broader earnings trend.
How far has macro sentiment swung?
The BofA fund-manager survey shows a net 54% of European investors expect equities to rise in coming months; in June, a net 4% still expected a decline.
A net 37% are betting on a "Goldilocks" scenario — solid growth with falling inflation — over the next three months, the first time this view has been the consensus since October 2024.
This means → a strengthening global backdrop, large-scale European fiscal stimulus, and broadening AI spending are converging to flip investor sentiment from wait-and-see to actively bullish.
European equities in H2 — earnings expansion delivered, or valuations already stretched?
BULL
Broadest earnings upgrades in five years
80% of sectors in net upgrades — a market-wide improvement, not a narrow rally.
Negative catalysts fading
Healthcare, staples, luxury — hard to find fresh headwinds in heavyweight sectors.
AI + banks + industrials widen the runway
Earnings upgrade momentum is spreading beyond tech into cyclicals.
BEAR
Valuations already price recovery in
SocGen holds a 600-point target, arguing the rebound is fully discounted.
Institutional participation is thin
Volumes below pre-Middle-East-conflict levels; institutions are net sellers.
Macro risks are not gone
Middle East tensions, US midterms, tariff risk, and rising bond yields all loom.
In plain terms = bulls are betting earnings improvement has further to run; bears are betting the price already reflects the good news. Q3 earnings season is the referee.
What exactly are the bears worried about?
SocGen's European equity strategy head Roland Kaloyan holds a year-end target of 600 points, expecting a modest decline — he argues current valuations fully reflect the recovery.
TFS is the most bearish, forecasting a drop to 585 points — roughly 9% downside.
Bloomberg Intelligence strategist Laurent Douillet flags that the rally is concentrated in financials and AI; half of all sectors are underperforming the index, while broad-based earnings downgrades and fading energy tailwinds cloud the sustainability of gains.
What comes next?
Q3 earnings season is the critical checkpoint — whether revision breadth can keep expanding will determine if current valuations are justified or stretched.
This means → if breadth narrows and the beat rate drops, the bear case gains traction fast; if breadth holds, the bull target of 690 points starts to look reasonable.
In plain terms = the market's core question boils down to one thing: how much good news is still left that has not been priced in?
Content is for reference only, not financial advice.