Goldman Sachs Raises STOXX 600 Target

Goldman Sachs Raises STOXX 600 Target on Strong Earnings

Goldman Sachs, a U.S. brokerage, increased its 12-month target for the pan-European STOXX 600 index to 660 on June 1, citing resilient corporate earnings growth. This new target represents an approximate 5.4% upside from the index's last close of 626. The firm also adjusted its three-month and six-month targets to 640 and 645, respectively.

The upward revision is attributed to solid nominal growth, positive revisions in the energy sector, and robust margins across other market segments. Goldman Sachs noted that optimism surrounding artificial intelligence (AI) has also contributed to the market rally. Despite geopolitical tensions in the Middle East, which have tempered sentiment, the STOXX 600 gained 2.5% in May and has remained near record highs.

However, the brokerage highlighted that inflationary pressures and expectations of prolonged elevated interest rates are capping valuations. While the European market does not exhibit the concentration issues seen in the U.S., the rally has been largely driven by AI-related stocks and the energy sector, with consumer-related sectors lagging. Goldman Sachs projects earnings-per-share growth of 10% for the index in 2026 and 5% in 2027, anticipating a slowdown as higher energy costs impact margins. The STOXX 600's 12-month forward price-to-earnings ratio stands at 17.55, compared to the S&P 500's 27.94.