Citi sees record highs for European stocks…just not yet

Wall Street strategists believe a new high will be reached mid-2025.

Rising profits will lift European stocks to new records by mid-2025, according to Citigroup strategists, who expect the STOXX 600 to rally 11% to 580 points after an already solid run this year.

The pan-European index is up 9% year-to-date after breaking into unchartered high levels in May, with the tech, banking and healthcare sectors leading the gains.

Strategists led by Beata Manthey say they remain encouraged by a positive earnings momentum and favorable macroeconomic conditions in the region with a first interest-rate cut from the European Central Bank last week.

Citi’s base case is for valuation multiples to remain steady at about 14 times forward profits but this might prove too conservative in a monetary easing cycle, they cautioned.

In terms of sectors, Citi continues to favor tech, industrials and health care and raises its recommendation for travel and leisure. Its analysts remain cautious cautious on autos, telecoms and utilities, while it cut its rating for construction materials.