Investment bank Goldman Sachs has revised its forecast for the European stock market to improve. Analysts have raised the twelve-month target for the STOXX 600 index to six hundred and ninety-five points, compared with the previous forecast of six hundred and sixty points. The new target level assumes a growth potential of about five and a half percent of the current market values. This decision is based on strong corporate profits and the overall resilience of European economies. Europe is currently experiencing one of the strongest corporate reporting seasons in the last few years. The growth in the energy and raw materials sectors is offsetting the weakening consumer demand in other industries.

Goldman Sachs strategists noted in their research note that the recent financial results of European companies turned out to be stronger than is commonly believed in the market. European stocks are still cheaper than American stocks, while offering relatively high returns to shareholders through dividend payments and repurchase programs. The companies included in the base of the STOXX 600 index are expected to collectively show profit growth of twenty-three point four percent. Since the beginning of this year, the European index has grown by eleven and three tenths of a percent, while the American S&P 500 has gained thirteen and nine tenths of a percent, despite continuing concerns about the reliability of energy supply.

Nevertheless, Goldman Sachs analysts warned that a prolonged energy shock remains the main risk for the region. The dependence of European countries on imported energy continues to restrain investors' appetite for risk. The Goldman Sachs assessment is based on the published results of 268 companies and forecasts for those who have not yet submitted reports.

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The material has been prepared solely for informational purposes and does not constitute financial advice or recommendation.