Stock Markets August 21, 2026 06:01 AM

UBS Lifts 2026 Eurozone Earnings Forecast, Citing Broader Profit Momentum

Bank raises expected earnings growth to about 15% and highlights sector-wide improvement and stronger analyst revisions

By Leila Farooq
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UBS has increased its 2026 earnings growth projection for Eurozone stocks to roughly 15%, up from prior forecasts of 8% for the EuroStoxx 50 and 11% for wider Eurozone benchmarks. The bank points to a widening earnings cycle after second-quarter results, stronger analyst revisions, and improving manufacturing as drivers, while keeping its 2027 forecast at 15%.

UBS Lifts 2026 Eurozone Earnings Forecast, Citing Broader Profit Momentum
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Key Points

  • UBS raised its 2026 Eurozone earnings growth forecast to about 15% from previous forecasts of 8% for the EuroStoxx 50 and 11% for broader Eurozone indices; the 2027 forecast remains at 15%.
  • Reported earnings after most second-quarter results were about 22% higher year on year, or roughly 11% excluding energy, versus 12% growth in Q1; UBS sees margin support from cost discipline and rising contribution from revenue growth as manufacturing improves and currency headwinds fade.
  • UBS expects profit growth across all sectors this year, upgraded European information technology to Attractive, and favors banks, industrials, consumer discretionary, health care, information technology and Germany.

UBS has revised upward its earnings-growth outlook for Eurozone equities in 2026, lifting the expected increase to around 15%. That marks a sizeable rise from its earlier forecasts of 8% for the EuroStoxx 50 and 11% for broader Eurozone indices, according to the bank's updated projections. UBS kept its 2027 earnings-growth forecast unchanged at 15%.

After most companies had reported second-quarter results, UBS noted that reported earnings were running about 22% higher year on year. Excluding energy firms, the bank said earnings growth was roughly 11%, compared with 12% growth recorded in the first quarter.

Cost discipline remained an important factor supporting margins, UBS said, but it expects revenue growth to play an increasing role as several headwinds ease. Specifically, the bank pointed to improving manufacturing conditions, a reduction in currency-related pressures and stronger operating leverage as elements that should help revenues and profits recover further.

UBS described the improvement as broad-based across sectors and said it anticipated profit growth in every sector this year. The broker highlighted a pickup in financials, where loan demand and capital markets activity were improving. Industrial companies, it added, were benefiting from investment in areas such as AI, electrification and defence, as well as from better cyclical trends in automation.

Following a recent correction, UBS upgraded European information technology to an Attractive rating. The bank stated that valuations in the sector were no longer stretched and that renewed earnings momentum, together with rising expectations for AI-related semiconductor capital spending, provided support for the upgrade.

UBS also pointed to a strengthening breadth of analysts' earnings revisions, which it said had reached the highest level in three years. In addition, the bank noted that global manufacturing purchasing managers' indices had recovered into the low- to mid-50s - levels that historically have typically coincided with the end of downgrade cycles.

Overall, UBS maintained an attractive stance on European equities, particularly those in the Eurozone. The bank listed its sector preferences as banks, industrials, consumer discretionary, health care and information technology, and it singled out Germany as a favored market, noting that Germany's fiscal support offered an additional tailwind.

In terms of index targets, UBS's central scenario projects the EuroStoxx 50 at 6,900 in December 2026 and 7,100 in June 2027. Its upside scenario sets a June 2027 target of 7,600, while the downside scenario places a June 2027 level at 4,700.


Note: This report summarizes UBS's updated earnings forecasts, sector views and index scenario targets as presented in the bank's recent outlook.

Risks

  • Currency headwinds - while UBS expects these to fade and support revenue growth, persistence of currency pressures could limit the revenue recovery and margin improvement, affecting sectors dependent on exports such as industrials.
  • Manufacturing momentum - UBS's outlook relies in part on improving manufacturing; if manufacturing does not strengthen as expected, that could dampen cyclically sensitive sectors including industrials and automation.
  • Analysts' revisions and PMIs - UBS cites stronger breadth in analysts' earnings revisions and PMIs in the low- to mid-50s; a reversal in those indicators could undermine the end of downgrade-cycle signals and weigh on financials and capital markets activity.

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