European earnings season is slowly picking up pace and consumers are experiencing better performance, with Burberry BRBY becoming the latest company to beat expectations on Friday.
Deutsche Bank analysts are optimistic about European earnings, especially consumer-related sectors.
“We continue to think that consumers will benefit from higher spending, especially in Europe,” Deutsche Bank wrote.
“First Q4 results (Richemont, Zalando, Adidas) show positive developments in the consumer sector, and strong comparisons vs consensus.”
Deutsche Bank has been overweight the retail sector since October, favoring the sector over luxury goods, but upbeat results from Richemont CFR and Burberry could signal progress after a disappointing 2024.
“It looks like luxury companies are capable of generating solid sales growth even without a real recovery in China,” DB said.
“If revenues from the Luxury sector provide a positive surprise, we will review our decision as this may shift flows from Retail to Luxury.”
Next week, Europe’s largest company and luxury sector leader LVMH MC reports, along with the next three largest European companies – Novo Nordisk NOVO_B, SAP SAP and ASML ASML.
Barclays noted that Thursday was the busiest day of the European earnings season when measured by market capitalization, with 36 companies reporting with a total market capitalization of 1.2325 trillion euros.
Source: Reuters (Samuel Indyk)
