As investors prepare their portfolios for 2025, two Wall Street banks have identified European stocks they believe offer significant growth potential despite market uncertainties. Moran Stanley downgraded European equities to neutral earlier this year, and now say it’s a “stock picker’s market” as equities on the continent have begun to diverge from each other in terms of performance. While many stocks are expected to underperform, the Wall Street bank said there is “material scope for alpha generation” if investors buy the right ones. The investment bank named payment technology company Adyen , food nutrition firm Glanbia , energy engineering firm Saipem , and British housebuilder Barratt Redrow among its “top stock picks” going into 2025, in a note to clients on Nov 27. Meanwhile, investment firm Bernstein named several mid-cap stocks, including Saipem , market research firm Ipsos , France’s auto firm Trigano and engineering group Duerr , among its favorite stocks. The equity research house’s top 10 picks have outperformed the MSCI Europe Small index by 5 percentage points since the end of October. Adyen The payments service provider reported 21% revenue growth in the third quarter of 2024 and Morgan Stanley expects growth to accelerate to around 24% in 2025, making it a strong player in the global payments market. Morgan Stanley expects Adyen shares to rise 40% over the next 12 months. Ipsos Bernstein gives the market research company Ipsos 78% upside potential, primarily driven by an expected rebound in its U.S. business. The company stands out among Bernstein’s picks as one of the few stocks with strong U.S. exposure, but with a low tariff risk post-election. Glanbia Morgan Stanley said Glanbia shares are significantly undervalued, trading at 11 times expected 2025 earnings, calling it the “cheapest” stock in the consumer staples sector. The bank highlighted Glanbia’s position as a market leader in protein nutrition and projects 10% earnings growth annually. Shares are expected to rise 42% over the next year, according to Morgan Stanley’s estimates. Saipem Both Morgan Stanley and Bernstein recommended Saipem, with Morgan Stanley giving it over 40% upside potential. Bernstein particularly likes Saipem’s solid environmental credentials and alignment with their “green leadership” theme. It added that the stock has delivered a 19% return since their initial recommendation. Barratt Redrow Morgan Stanley pointed to the recent approval of the merger between Barrat and Redrow, both among the largest house builders in the U.K., as a positive catalyst that should send the stock higher. The bank noted that the stock trades at a 40% discount to its 10-year median price-to-book value, making it attractively valued despite its year-to-date underperformance. Durr The German engineering firm Dürr has consistently featured in Bernstein’s top picks this year. The company, which provides automation and energy efficiency services, is expected to benefit from several industry trends, including the shift to electric vehicles and increasing demand for sustainable construction materials. Bernstein believes the stock is likely to rise by 75% in 2025 after this year’s lackluster performance. Trigano French motorhome maker Trigano stands out for its exceptional cash-generating ability, according to Bernstein. Trigano shares have suffered alongside the wider rout in France’s stock market due to political uncertainty this year, but Bernstein believes that’s about to change and expects the stock to rise by 75% in 2025. — CNBC’s Michael Bloom contributed reporting.
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