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Goldman updates European conviction list, adds 4 new stocks

Published 02/05/2024, 13:52
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Today, Goldman Sachs released the May edition of its "European Conviction List - Directors’ Cut" report, revealing the firm's new top Buy-rated stock additions for the region.

Specifically, the banking giant’s equity analysts added London Stock Exchange Group (LON:LSEG), Neste, Saint-Gobain and Zealand Pharma (NASDAQ:ZEAL) stocks to their coveted list, while German auto behemoth Mercedes was removed.

Regarding LSEG, analysts at Goldman Sachs “see LSEG’s product differentiation and pricing power driving above-consensus revenue growth, which coupled with declining capex intensity supports an uplift to FCF generation, which in turn should drive a multiple Re-rating,” the note writes.

Meanwhile, analysts are becoming increasingly bullish on Neste, a Finland-based oil refiner, saying they expect that the company will lead the global sustainable aviation fuel (SAF) market over the next 2-3 years.

This dominance is anticipated to sustain robust SAF margins and support their forecast for a +12% above-consensus EBITDA in 2025.

For manufacturer Sant-Gobain, Goldman Sachs highlighted that the stock continues to trade at a lower multiple compared to its global peers despite its strong price performance, reflecting investor skepticism regarding the sustainability of its margins.

“However, analysts argue margin improvements (via portfolio rotation, cost cuts) are structural, in addition to upside from a volume inflection from 2025E and an improvement in price-cost dynamics,” the note continued.

Finally, the last addition to the bank’s Director’s Cut list was Danish pharmaceutical firm Zealand Pharma, which, despite its year-to-date rally, could see further upside “given the company is a key beneficiary of the growing anti-obesity drug market, which remains large enough for multiple players,” analysts at Goldman Sachs wrote.

Analysts point out several key clinical trial catalysts for the stock this year, most notably the upcoming petrelintide readout expected in the second quarter of 2024.

This trial “has scope to show differentiation on tolerability and additional benefits vs. competitor drugs,” Goldman Sachs said in the note.

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