As the second-quarter earnings season kicks off, UBS has raised its conviction on European equities, even as headline growth projections remain tepid. In its latest European Equity Strategy update, the brokerage highlights a growing opportunity for company-specific outperformance, underpinned by selective positioning and divergent earnings potential.
With Q2 earnings for Corporate Europe expected to remain “quite muted”, investor focus is now pivoting away from broad macro trends to individual company execution and forward guidance.
UBS notes that full-year 2025 earnings forecasts for European corporates have been revised down to just 2%, dampened by:
Ongoing trade tariffs, particularly in auto, industrials, and energy
Currency headwinds from a strong dollar and weaker euro
A continuation of the flat earnings trend observed since 2010, punctuated by only modest gains from 2016–2022
This stagnation reflects structural challenges across the region, including aging demographics, slow productivity gains, and a fragmented capital market environment.
Investors seeking granular earnings trends across Europe’s major public companies can use the Earnings Historical API, which provides decade-spanning earnings data for publicly listed firms, enabling robust cross-cycle performance analysis.
Despite a subdued macro backdrop, UBS sees a constructive medium-term outlook, with earnings recovery likely resuming in 2026, driven by:
Cyclical sectors such as industrials, construction, and discretionary retail
Positive tailwinds from fiscal stimulus packages across the EU
Rebound in consumer spending, particularly in Northern Europe
In the short term, UBS is betting on company-specific earnings surprises to drive market alpha. Their analysts have flagged:
21 companies with potential for positive earnings divergence
10 companies where investor caution is warranted
These assessments are based on a combination of:
Sector-level forecast deviations
Crowding scores from UBS Quant Research, which evaluate investor positioning intensity and contrarian opportunity
With consensus expectations already muted, modest earnings beats or even reaffirmed guidance could lead to outsized market reactions. UBS argues that valuation dispersion in Europe is unusually high, which means:
High-performing names could re-rate quickly
Underperformers may face steep drawdowns due to positioning unwinds
This makes earnings season particularly crucial for active managers—and creates tactical entry points for retail and institutional investors alike.
To track real-time analyst sentiment and company-specific guidance changes, refer to the Price Target Summary API, which aggregates updates from equity analysts and market-moving revisions on price forecasts.
UBS’s bullish stance on European equities isn’t built on broad earnings strength—it’s based on selective conviction. In an environment defined by macro uncertainty and low earnings visibility, company-level insights, positioning data, and tactical sector rotation are emerging as key drivers of alpha.
With Europe’s corporate fundamentals likely to reset in 2026, the coming quarters represent a pivotal time to build exposure to names poised for resilience—and potential upside surprises.
Use FMP’s real-time data APIs like Earnings Historical and Price Target Summary to track earnings deviations, analyst positioning, and sector sentiment across Europe’s major public companies.
