Investing.com — Goldman Sachs strategists expect “lacklustre upside” in 2025 for European stocks, projecting a modest 4% price increase and a 7% total return, down from 10% last year.
The team’s outlook is based on a subdued macroeconomic forecast, anticipating a slowdown in GDP growth for 2025, which is likely to result in limited growth in corporate revenues and profits.
Furthermore, with stock valuations already aligned with historical levels, strategists “see minimal re-rating potential at an index level,” Goldman said in a Friday note.
Nevertheless, the team foresees an environment conducive to stock picking due to the potential for low correlation and high dispersion among stocks.
“Against this backdrop, we see potential for shareholder returns to play a large role in performance differentiation, and highlight stocks that screen well on an income lens and on buybacks,” the note states.
Goldman Sachs points out that despite a recent uptick in global bond yields, several European firms still provide dividend yields that surpass local government bond yields, coupled with dividend per share (DPS) growth of more than 5% from fiscal year 2024 to 2026.
Companies…
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