J.P. Morgan raises European equity targets on earnings growth

J.P. Morgan in a note dated Monday raised its December 2026 targets for European equity indexes, citing accelerating earnings growth and the prospect of broader market participation.

The broker lifted its Stoxx 600 target to 680 from 630, implying 7% upside from the index’s current level of 636.

It raised the MSCI Eurozone target to 420 from 385, a 10% upside from 383. The FTSE 100 target was raised to 11,000 from 10,300, implying 5% upside from 10,508.

The broker also set a target of 2,750 for the MSCI Europe, implying 8% upside from its current level of 2,536, and a target of 6,800 for the Euro Stoxx 50, implying 9% upside from its current level of 6,222.

“We update the targets in this report, looking for further upside from here, ranging from 5-10%,” J.P. Morgan said.

The broker’s old Stoxx 600 target of 630, published in its Year Ahead outlook last November, had implied 12% upside at the time and has delivered 13% upside since publication, with the index reaching a year-to-date high last week.

The old MSCI Eurozone target of 385 had implied 15% upside when published and has delivered 14% since.

J.P. Morgan raised its Eurozone earnings forecast, citing a pickup in growth after three weaker years. “Our updated Eurozone EPS growth forecast for 2026 now stands at 18%, and 12% for 2027,” the broker said, up from a prior forecast of 13% for 2026 and 10% for 2027.

For the UK, the analysts raised its 2026 EPS growth forecast to 18% from 8%, while cutting its 2027 estimate to 5% from 7%.

The analysts said the Eurozone’s 12-month forward price-to-earnings multiple, currently at 15 times, is likely to “at least stay at current levels of 15x, and potentially even move a bit higher,” supported by lower oil prices, rangebound bond yields and inflation expectations remaining anchored.

Within Europe, MSCI Spain has gained 22.3% and MSCI Italy 18.1% since Nov. 24, 2025, while MSCI Germany has lagged with a 5.4% gain, which J.P. Morgan attributed in part to Germany’s “disproportionate exposure to geopolitical and energy shocks.”

On positioning, the broker said it remains “long beta, including Consumer plays,” and keeps a positive call on Semiconductors, Industrials and Mining.

It said Banks “should also trade well, as they are leveraged to PMIs and to credit growth.” The broker said it remains “cautious on Business Services, Software and Media” and “still not excited about Defense, having argued since last September to reduce it, post a strong past run.”

J.P. Morgan rates the Eurozone “overweight,” the UK “neutral,” and the U.S. “neutral” within developed markets, while rating emerging markets overweight.