UBS forecast about 8% upside for the Stoxx Europe 600 by year-end, raising its target to 690 points from 630.

It reflects confidence that Europe’s earnings growth and stock rally can hold through geopolitical strain.

Why Banks Raised Their European Stock Target

European stocks have climbed back to record territory this year after a volatile first half. The index set a record close near 652 points on July 3. 

It has since eased to about 639, but remains up more than 7% for the year. Worries about the Iran war faded after a ceasefire, and the rally held even as tensions flared again.

UBS strategists Gerry Fowler and Sutanya Chedda raised their target to 690 from 630, Bloomberg reported. The multinational investment bank and financial services firm expects the rally to run into 2027. It set a 760 target, which implies a 19% gain over the next 18 months.

“There’s probably more upside than downside risk at this point,” Fowler said.

Their 2026 forecast sits above JPMorgan’s 680, the previous highest target. Bank of America, Deutsche Bank, and Kepler Cheuvreux also lifted their targets.

The analysts pointed to stronger AI-related upgrades, steady bank revisions, and less drag from large defensive sectors.

Strategists Split on What Comes Next

Across the July poll, the 18 strategists put the index at 647 on average by the end of 2026. That sits less than 1% above current levels, yet bearish calls are thinning out.

Only 5 of the 18 strategists expect the index to fall by year-end. Just 2 see declines steeper than 5%.

TFS is the most bearish, projecting a 9% drop to 585 points. Societe Generale ranks next, with strategist Roland Kaloyan calling for a slide of about 6% to 600. He warned that high expectations leave little room for disappointment.

“In our view, the main risk is not the absence of earnings growth, but that the recovery falls short of what is already priced in,” Kaloyan said.

The next test comes with the second-quarter results. More than 45% of firms have already beaten estimates, while 27% have missed.

Source: BeInCrypto