Volkswagen and more: Barclays names European 'conviction' stock ideas — and gives one 59% upside

Published Mon, Jan 22 20246:19 PM EST

Barclays has made an upbeat forecast for stocks in 2024, expecting higher, yet more moderate, returns than the exceptional gains of last year. The investment bank believes stocks still have room to rise if inflation continues slowing, allowing central banks to eventually cut interest rates. "Much dislocation remains under the hood, with value, small caps and international/EU equities offering catch-up potential if a soft landing indeed materializes," said Barclays equity strategists led by Emmanuel Cau in a note to clients on Jan. 18. The Wall Street bank named the following five companies in its European "Conviction with Catalysts" list of stock ideas that offer strong upside potential. Enav Topping the list with the biggest upside potential is Enav , an air traffic controller company based in Italy. Barclays expects shares to rise by 59% to 5.20 euros ($5.70) a share over the next 12 months. The bank expects the company's "business plan update" scheduled for some time in the first quarter of this year to be a catalyst for the shares to rerate. The investment bank also sees the current share price as "an attractive entry point" for Enav's stock after a difficult 2023. UCB Barclays believes Belgian biopharmaceutical company UCB can beat 2023 sales expectations thanks to its new psoriasis drug Bimzelx. Although the drug has struggled in the U.S. over side effect warnings, Barclays sees signs of healthy global demand. UCB reports full-year results on Feb. 28, a catalyst that could help the stock begin its rise by 42% over the next 12 months, according to the bank. ABN Amro Dutch bank ABN Amro is also well positioned, in Barclays' view, and looks set for stronger profits and cost savings. The investment bank anticipates ABN lowering its capital ratio target when it reports results on Feb. 14, freeing up cash for dividends and buybacks. Vivendi In December, French media conglomerate Vivendi announced it is considering splitting into three separate companies. Barclays estimates that could unlock 24% upside in Vivendi's valuation owing to lower holding company discounts. The bank said more details are expected alongside 2023 results on March 8, which could prove to be a catalyst. Volkswagen Barclays believes Volkswagen offers turnaround potential in 2024 after a disastrous 2023 and 2022. The bank sees the carmaker 's management as committed to improving margins. Barclays also believes electric vehicles hitting showrooms this year should boost Volkswagen's mix toward higher-profit models. "Overall, in the context of extremely negative investor sentiment we see room for earnings upgrades and re-rating potential," said the Barclays analysts. — CNBC's Michael Bloom contributed reporting.