UBS has named its favorite European stocks, including several new picks rated a "buy" by the bank. The Swiss bank is bullish on Europe and expects earnings per share — an important metric used by traders to gauge the value of a stock — to grow 15% in the region this year, an estimate that is 8 percentage points above consensus, UBS analyst Nick Nelson said on Jan. 21. On a sectoral basis, the bank is overweight on a raft of industries, including European pharmaceuticals, insurance, energy, chemicals, software, beverages, autos and more. Stock picks Among the bank's newly upgraded stocks, four were from the bank's favored sectors. British chemicals firm Croda made the UBS list. The company manufactures the additives used in the Pfizer and BioNTech Covid-19 vaccines and UBS expects material upside to the company's revenue guidance from this contract. In the longer term, the company is also expected to benefit beyond Covid vaccines, Nelson said. UBS has a price target of 11,500 pence ($155.23) on the stock, which closed at 7,742 pence on Jan. 24, representing a potential upside of 50%. The bank also likes Irish bookmaker Flutter Entertainment , which it said has a market opportunity of $19 billion. It has forecast the company to achieve a 30% share of the U.S. sports betting market and 20% share of the U.S. iGaming market by 2025. A potential partial listing of subsidiary FanDuel could also unlock some value, Nelson said. UBS expects the company to outperform the market in Australia and believes the company is "strongly positioned" to post compounded total revenue growth of 10.5% into 2025. The bank has a price target of 16,200 pence on the stock, which closed at 10,545 pence on Jan. 24, representing a potential upside of 54%. UBS likes hotel operator InterContinental Hotels Group , which the bank said will benefit from recent strategic investments in its brand portfolio, as well as expected new hotel project awards this year. Nelson noted that the recent recovery in revenue per available room — a key metric of a hotel's performance — is likely to continue this year and contribute to good earnings momentum. The bank has a price target of 5,575 pence on the stock, which closed at 4,666 pence on Jan. 24, representing a potential upside of 19.5%. UBS also included British chemicals firm Evonik, which it says has the potential to deliver higher organic growth and stronger earnings before interest, taxes, depreciation, and amortization growth in the next four years. The bank has also forecast higher free cashflow for the company into 2025, Nelson said. UBS has a price target of 34 euros ($38.50) on the stock, which implies a potential upside of 19% to its closing price of 28.50 euros on Jan. 24.
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UBS has named its favorite European stocks, including several new picks rated a "buy" by the bank.