Europe Equity Research04 February 2024 EU Insights – February 2024Must-Reads and Highlights from Equity ResearchHead of EMEA Equity ResearchSophie L Warrick AC(44-20) 7134-1423sophie.l.warrick@jpmorgan.comHead of EMEA Equity Research ContentBruna Haq AC(44-20) 7134-0681bruna.haq@jpmorgan.comContent TeamAnastasia Tikhonova(44-20) 3493-8007anastasia.tikhonova@jpmorgan.comJ.P. Morgan Securities plcSee page 34 for analyst certification and important disclosures, including non-US analyst disclosures.J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.www.jpmorganmarkets.comThis month in J.P. Morgan Europe Equity Research… Red Sea sector impacts. Our analysts look at the potential direct and indirect impacts of the ongoing disruption to this key trade route - see page 10. Banks – the start of the downgrades. After a 40% EPS upgrade cycle in the past 18 months, Kian Abouhossein & team pivoted to EPS downgrades due to lower forward rates, downgrading Banco BPM, Bank of Ireland and ABN to UW, Banco de Sadabell to N. Temenos – Bank to Business. Toby Ogg deep dived into Temenos(OW) and placed the shares on Positive Catalyst Watch into the upcoming CMD, seeing scope for further consensus upgrades. Capital Goods & PMI trough – The set-up is all wrong. Andrew Wilson revisited the team’s analysis on whether there is an opportunity to play a PMI trough, reiterating their view that the sector characteristics are transitioning to quality from cyclical, and are supportive of a more cautious stance on SKF (UW), Sandvik (N) and Rexel (N). UK Grocers – Safe Harbour or Shallow Waters? In collaboration withCredit Research, Borja Olcese reiterated his cautious stance on UKFood Retail, noting bearish read across from US & European peers, an imminent slowdown in top line momentum and heightened price competition. We rate Tesco, Sainsbury and B&M UW. Assessing Telcos’ guidance armory. Akhil Dattani argued that Telcoswould benefit from adding Adj. EPS to their guidance armory, following in the footsteps of Deutsche Telekom (OW). Names with an attractive spread between their EPS growth and PE multiples include BT (OW) and DT (both on Analyst Focus List). Postcards from San Francisco: Our Pharma and Med Tech teams detailed their feedback from 30+ meetings at JPM’s 42nd Global Healthcare Conference, including the GLP-1 Obesity Panel. ESG Discovery 2.0 First Principles. Jean-Xavier and team launched an enhanced version of our ESG Discovery platform and highlighted a supportive ESG integration angle to some of our analysts’ top picks, including Danone, RWE and SEGRO (all OW, Analyst Focus ...
