French stocks could see a 60 percent rally over the next two years, thanks to the country's long-overdue economic reforms, a Société Générale analyst told CNBC.
The CAC 40 will hit 7,000 in 2016, surpassing its all-time high of 6,922 of 14 years ago, according to Alain Bokobza, head of global asset allocation at Societe Generale.
"Historically the is all-time high, the Dax is all-time high, the FTSE total return is all-time high, and the French CAC 40 was 6900 back in September 2000, 15 years ago. So this is one of the very lagging equity indexes globally because the French economic policy was lagging in terms of restructuring," Bokobza told CNBC in a TV interview.
"Now that restructuring comes, I think it is the time to be optimistic about French equities."
The call comes amid a big correction in European stocks with major indexes down by over 1 percent by midday and the Euro Stoxx 600 sliding 1.34 percent.
France's economy has come under scrutiny in recent years for a lack of structural reform. But the country saw 0.3 percent growth last year, according to the European Commission's winter economic forecast, and is expected to see 1 percent growth in 2014.
The government has set out a range of reforms to try and help France become more competitive. In January, French president Francois Hollande promised a 30 billion euro payroll tax cut for French businesses to help reduce the wage bill of employers. New pro-business prime minister Manuel Valls also announced 11 billion euros in extra tax cuts for businesses and households, while pledging to axe France's corporate tax rate.
These reforms should give French stocks a boost, Bokobza said.
"You had a vote in parliament in after Mr Valls the new prime minister was named. You had an overwhelming majority in parliament to support the new overall economic policy…I think the coming of all of this makes a bull market, it is what we are just facing for French assets at the moment," Bokobza told CNBC.
'A load of CAC'?
The CAC 40 has trailed gains seen of some European markets last year, but still saw a 16 percent rise, just below the 16.7 percent posted by the Stoxx 600.
France is currently in conflict with the European Union to bring its budget deficit down to match the bloc's rules. France budget deficit stands at 4.3 percent of GDP and has twice pushed back its deadline to hit the 3 percent target set by the EU.
The persistent problems in the French economy and question marks over the pace of reform, has left some analysts doubtful as to whether the country's stock market will see strong gains.
"It's a load of CAC," Mike Ingram, market strategist at BGC Brokers, told CNBC in a phone interview.
"There is no doubt the macro numbers have been better, but there is still nothing to suggest France or broad swathes of the euro zone are on a sustainable path to recovery."
However, other analysts mirror Société Générale's call for a 60 percent rally, but not for the reasons given by Bokobza.
Beat Wittmann, CEO of TCMG Asset Management, is doubtful that Hollande's government can implement the needed reforms, but says the solidarity of French companies through the financial crisis makes the stock market attractive.
"I am very bullish on the French equity market because France has really across the whole crisis had very well-managed crisis…They are great companies and they are very attractively priced and I think I would rather invest in France than in Japan, but not for macro reasons," Wittmann told CNBC in a TV interview.