Analysts from leading investment banks, including UBS and Deutsche Bank, have significantly revised their forecasts for the European stock market upward. According to my data, the consensus forecast suggests the key Stoxx Europe 600 index will rise by approximately 8% by the end of this year.
Specifically, UBS strategists raised their target for the index from 630 to 690 points. This decision is backed by confidence in sustained growth in corporate profits, which, in my view, will continue despite ongoing geopolitical turbulence. Deutsche Bank and other major players, such as Bank of America and Kepler Cheuvreux, have also joined this bullish trend, revising their estimates upward.
The current dynamics are impressive: after a volatile first half of the year, the Stoxx 600 index has fully recovered its losses and hit new all-time highs, recording a record of around 652 points on July 3. Since the start of the year, the index's return exceeds 7%, which is a strong signal for the market. UBS looks even further ahead, forecasting growth to 760 points by 2027 — this implies a potential upside of nearly 19% over the next year and a half.
Bears lose ground, but risks remain
However, not all market participants share such an optimistic view. In a July survey of 18 strategists, the average forecast for the Stoxx 600 at the end of 2026 is 647 points — only slightly above current levels. Notably, the number of bearish forecasts is shrinking: only 5 out of 18 expect the index to decline by year-end, and only two forecast a drop of more than 5%.
The most cautious stance is taken by TFS, which expects a 9% decline to 585 points. Societe Generale strategist Roland Kaloyan warns that high expectations leave no room for disappointment — any deviation from corporate profit forecasts could trigger a correction of roughly 6% to the 600-point level. As I see it, the main risk lies not in the absence of profit growth, but in the possibility that the actual recovery may be weaker than the expectations already priced into current valuations.
The next key test will be the second-quarter financial results. So far, more than 45% of companies have beaten forecasts, while 27% have reported worse-than-expected results. This confirms my view: the market is in a phase of reassessment, and investors should closely monitor corporate reports to adjust their strategies in a timely manner.