Leading global banks are revising their targets for the European stock market, demonstrating a confident bullish stance. UBS analysts have raised their target for the Stoxx Europe 600 index from 630 to 690 points, forecasting an 8% increase by the end of this year. This move is not isolated — Deutsche Bank, Bank of America, and Kepler Cheuvreux have also adjusted their estimates upward.
After a volatile first half of the year, the European market has fully recovered its previous losses and hit new all-time highs. On July 3, the index recorded a record high of around 652 points, and has since corrected to 639 points. Nevertheless, the total return since the start of the year exceeds 7%. The easing of geopolitical tensions around Iran following a ceasefire has reignited the upward trend.
Bullish Scenario Until 2027
UBS strategists Gerry Fowler and Suthanya Chadda expect the rally to continue until 2027. Their forecast for this period stands at 760 points — implying a 19% increase over the next year and a half. UBS's 2026 forecast is higher than JPMorgan's (680 points), which previously had the highest estimate. Bank of America, Deutsche Bank, and Kepler Cheuvreux have also raised their forecasts.
Analysts highlight stronger dynamics in the segment related to artificial intelligence, stable revisions in bank indicators, and reduced pressure from defensive sectors.
Strategists' Opinions Are Divided
In a July survey of 18 strategists, the average expectation is that the index will rise to 647 points by the end of 2026. This is less than 1% above current levels, but the number of bearish forecasts is decreasing. Only 5 out of 18 respondents believe the index will decline by the end of the year, and just two forecast a drop of more than 5%.
The most cautious estimate comes from TFS, which expects a 9% decline to 585 points. Next is Societe Generale: strategist Roland Kaloyan forecasts a correction of about 6% to 600 points. According to him, high expectations leave no room for disappointment — any deviation from them could negatively impact market dynamics.
"The main risk, in our view, is not the lack of profit growth, but that the recovery will be weaker than the expectations priced in," Kaloyan explained.
The next test is the second-quarter financial results. Forecasts have already been exceeded by more than 45% of companies, while 27% reported worse-than-expected results.
Analyst's Opinion: The European market is showing resilience, but current valuations already incorporate significant optimism. The key risk is not so much macroeconomic instability, but rather inflated expectations for corporate profits. If second-quarter reports do not confirm aggressive forecasts, the correction could be painful. However, support from the AI sector and the banking sector still appears to be a reliable anchor for the bullish scenario.