Bank of America names its top European stock picks — including 10 that could defy Wall Street expectations

Published Wed, Dec 15 202111:19 PM EST

Bank of America has named a raft of European stocks that it believes have significantly more price upside than the wider market is currently predicting. The Wall Street titan has forecast 17% upside for the MSCI Europe stocks under its coverage over the coming 12 months. Among the different sectors and relative to the market consensus, Bank of America is "most positive" on European technology and utilities, with the bank projecting upside of 25% and 20% for the two sectors, respectively, over the next 12 months. This is against consensus estimates of 14% and 12% upside. Meanwhile, the bank expects European earnings per share growth — an important metric used by traders to gauge the value of a stock — to come in at 10% next year, with the energy sector expected to see the strongest EPS growth at 31% — an estimate that is 15% above consensus, the bank's strategists, led by Milla Savova, said in a note on Dec. 14. Above-consensus stock picks Bank of America compiled a list of 10 stocks where the bank's price targets were above consensus estimates. Luxury goods companies Richemont and Hermes make the list, with the bank's price targets for both firms higher than consensus by around 30%, Savova said. Two energy firms — France's TotalEnergies and Norway's Equinor — also made the list. Bank of America also included British industrial engineering firm Spirax-Sarco — a somewhat contrarian call from the bank as only 6% of sell-side analysts on the Street have a buy-rating on the stock. The bank's price target for the stock is 26% above consensus. The bank also likes Chilean copper miner Antofagasta , with the bank's 2022 EPS estimates for the London Stock Exchange-listed stock around 70% ahead of consensus, Savova said. Dutch semiconductor equipment maker ASML also turned up on the bank's screen , with the bank's price target on the stock more than 30% above consensus. Rounding off the bank's list are French insurer AXA , Swedish bank SEB and Italian energy firm Terna . Separately, Bank of America also named a slew of European stocks that it thinks will do well, believing the region will continue to recover. The bank noted that Europe continues to be in a "boom" phase — marked by rising inflation and bond yields alongside declining growth — as producer price inflation rose to "unprecedented heights," Paulina Strzelinska, a strategist at Bank of America, said in a note on Dec. 13. 'Boom' stocks Bank of America compiled a list "boom" stocks that it thinks will do well against this backdrop. The basket is overweight stocks in the financial services and energy sectors, with Bank of America's picks in the former including France's Societe Generale and Credit Agricole , the U.K's NatWest , Barclays, Standard Chartered and Lloyds , Italy's UniCredit , Germany's Deutsche Bank and Spain's Banco Santander . Energy names in the bank's basket include Spanish energy firm Repsol , Norwegian energy firm Equinor , Italian oil major Eni , as well BP .

Brendan McDermid | Reuters

Bank of America has named a raft of European stocks that it believes have significantly more price upside than the wider market is currently predicting.