LIVE MARKETS-Granolas: Is this the bottom?
The STOXX 600 is up 0.2%, with gold reaching a new record and Nasdaq futures rising. Europe's "Granolas"—top stocks like ASML, Nestle, SAP, and Novo Nordisk—have underperformed MSCI Europe by 25% since early 2024. J.P. Morgan suggests they may be undervalued, trading at a 6% discount to their 10-year median PE. Despite concerns, earnings are stable, with projected 8% EPS growth for 2025. The strategists favor ASML, Novo, AstraZeneca, SAP, and Sanofi, questioning if this marks the bottom for Granolas, whose market cap share has dropped from 27% to 20%.
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GRANOLAS: IS THIS THE BOTTOM?
Europe’s once-dominant “Granolas” - a group of 11 top stocks including ASML, Nestle, SAP and Novo Nordisk — have lost their shine, underperforming MSCI Europe by 25% since early 2024. But J.P.Morgan suggests the tide may be turning.
“Granolas have de-rated from trading outright expensive to trading on the cheap side of fair value,” write JPM strategists led by Mislav Matejka, noting the group now trades at a 6% discount to its 10-year median PE valuation.
Despite price weakness, earnings have held up.
JPM sees 2025 EPS growth at 8% for the group, versus flat for the broader market. It says cash flow trends are encouraging, buybacks have risen materially to 36 billion euros this year and dividend yields are set to rise to 3.1% by 2027.
The strategists acknowledge lingering concerns, especially in pharma, but argue much of the bad news is priced in. “Specifically for Pharma names, our analysts believe that the latest 100% tariffs news is manageable”.
Their overweights in the group are: ASML, Novo, AstraZeneca, SAP and Sanofi.
Granolas’ share of MSCI Europe market cap has dropped from 27% at their peak early last year to 20% - is this the bottom?
(Danilo Masoni)
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