Goldman Sachs raised its 12-month STOXX 600 target to 660, implying about 5.4% upside from the pan-European index’s last close of 626, the brokerage said.
The Wall Street brokerage also lifted its three-month target to 640 and its six-month target to 645, according to a note dated Friday.
The STOXX 600 gained 2.5% in May and has traded near record highs, Reuters reported. However, Middle East tensions have weighed on sentiment, limiting further gains.
Goldman Sachs cited solid nominal growth, positive revisions to energy-sector earnings, and resilient margins across the wider market. It also said AI-related optimism had supported the rally.
The brokerage forecast STOXX 600 earnings-per-share growth of 10% in 2026 and 5% in 2027. It said higher energy costs could slow momentum by weighing on margins.
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Goldman said inflation pressure and expectations of higher interest rates for longer were capping valuations. The STOXX 600 traded at a 12-month forward price-to-earnings ratio of 17.55, compared with 27.94 for the S&P 500.
The brokerage said international investors continued to allocate to Europe for value and diversification. However, it said domestic investors remained cautious because of weak growth and uncertainty.
