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Double-digit gains for Europe stocks before year-end?

The year is drawing to a close, but European equities still have plenty of room to run, according to HSBC.

"We see about 17 to 18 percent upside for continental European equities through the end of this year because we believe that in the next couple of months, maybe even later this month, we might see some further concrete action from Draghi," said Benjamin Pedley, HSBC's head of Asia investment strategy.

The remarks come after European Central Bank (ECB) chief Mario Draghi stressed on Monday that he is willing to do more to stimulate the economy, including purchasing government bonds.

Read MoreECB 'very likely' to buy sovereign bonds: Ex-Member

"We've heard it all before to some degree, but we do believe that the next step is sovereign bond purchases, and then potentially a subsequent step could be purchasing corporate debt," Pedley said. "If those events come to fruition, that will be a very significant fillip for European assets."

Year-to-date, both the pan-European FTSEurofirst 300 and the Stoxx 600 are up nearly 3 percent each.

Bullishness prevails

HSBC isn't alone; JPMorgan and UBS are also bullish on the region.

The U.S. brokerage upgraded the euro zone to overweight from underweight in a note on Monday, with the region "due a period of outperformance versus the United States," Reuters reported.

Read MoreFrench growth may top OECD target: Finance minister

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Meanwhile, UBS analysts said in a report earlier this month that they expect the Stoxx 600 index to rise 13 percent by the end of 2015 on the back of an expected 10 percent increase in corporate earnings growth next year.

Others took a more cautious approach given the legal challenges behind a potential sovereign bond purchase program.

Read MoreEuro zone, gold vote test Swiss central bank

"Once again it appears that markets are trying to price in a scenario which still has significant obstacles to it, not least a European Court of Justice decision on the legality of the Outright Monetary Transactions (OMT) program, which isn't due until next year. The program has already been declared 'ultra vires' by the German Constitutional Court so it's not hard to imagine what the court would make of a full blown sovereign bond buying program," said Michael Hewson, chief market analyst at CMC Markets U.K., in a note.

The currency effect

A weak euro is also expected to underpin equity market gains, improving the competitiveness of companies in the global market and benefiting earnings. The currency hit a two-week high of $1.25880 during the U.S. trading session on Monday but is down more than 9 percent year to date on the back of the ECB's recent stimulus efforts.

The central bank unveiled a raft of measures to ease credit conditions for banks earlier this year, including cutting interest rates to record lows and plans to purchase covered bonds and asset-backed securities (ABS).

Read MoreEuro zone GDP surprises, Greece exits recession

"We think it's similar to last year, where if you invested in Japanese equities and hedged the yen's exposure back into dollars, it's a similar approach to the euro zone right now," HSBC's Pedley said.

Within Europe, Pedley advises investors to focus on German exporters: "You've got the fillip from a slightly weak euro against a backdrop of reasonably strong growth."