UBS upgrades European equities, raises EuroStoxx target on improving outlook

UBS turned more constructive on European equities, upgrading the region to Attractive from Neutral and lifting its June 2027 EuroStoxx 50 target to 6,900 from 6,600. The bank expects improving cyclical conditions, fading geopolitical and energy risks, and a broadening of market performance beyond AI-linked stocks. UBS also upgraded the Eurozone, Europe overall and banks, while downgrading Switzerland and real estate to Neutral. The call implies roughly 10% upside for the EuroStoxx 50, plus an estimated 3% dividend yield. UBS highlighted 8% earnings growth for the EuroStoxx 50 this year and 15% in 2027, with banks benefiting from strong loan demand, active capital markets, stable rates, and attractive dividends. Key risks include slower global growth, renewed inflation, geopolitical/trade escalation, and weaker AI investment sentiment.