Jefferies adds five names to top franchise picks list

Jefferies has expanded its EMEA Franchise Picks list, adding five new high-conviction Buy-rated European stocks: Assa Abloy, British American Tobacco, Infineon Technologies, Stellantis, and UBS Group. These additions reflect specific investment theses, including Assa Abloy's cyclical recovery and valuation, BAT's underappreciated Next-Generation Product transformation and deleveraging, Infineon's strong positioning in structural growth areas like AI and EVs, Stellantis's operational inflection point and undervaluation, and UBS's expected re-rating driven by wealth management momentum and capital returns. The updated list now comprises 15 names, representing Jefferies' most differentiated European stock calls.

Analysis

Jefferies has expanded its EMEA Franchise Picks list with five new high-conviction, Buy-rated European equities, signaling specific opportunities based on fundamental catalysts. For Assa Abloy, the thesis is driven by valuation, as it trades at 15x/14x 2025/26 EBITA, a 15% discount to peers despite superior fundamentals and a clear path to over 9% revenue growth from recovering residential markets and M&A. British American Tobacco is highlighted for its underappreciated transformation, with its Velo brand's U.S. relaunch driving triple-digit year-over-year growth in Next-Generation Products (NGPs) and its healthier balance sheet poised to support increased shareholder returns. Infineon Technologies is positioned as an undervalued play on structural growth in EVs, renewables, and AI, with its AI-related power revenue projected to exceed €1 billion by FY27. Stellantis is identified as being at an inflection point, with the market underestimating its potential to restore pre-merger margins under a new strategic direction, while trading at a significant discount to automotive peers. Lastly, UBS Group is expected to reverse recent underperformance, driven by strong momentum in its Global Wealth Management division, a rapid wind-down of its non-core unit, and a significant capital return plan projected to reach 27% of its market cap by 2027, with a potential re-rating catalyst expected after a June update from the Federal Council.

Key Decisions for Investors

• Investors seeking value and recovery plays should evaluate Assa Abloy and Stellantis, which Jefferies identifies as trading at significant discounts to peers with clear catalysts for a re-rating.
• Consider positions in Infineon and British American Tobacco, as the analysis suggests the market is underappreciating their growth drivers from AI data centers and the transition to Next-Generation Products, respectively.
• For those focused on capital returns and corporate restructuring, monitor UBS for its expected re-rating, particularly following the anticipated June update from the Federal Council which could provide more clarity on its significant shareholder return program.
• Use the Jefferies EMEA Franchise Picks list as a source of differentiated, fundamental-driven ideas across various investment themes, including cyclical recovery, technology growth, and corporate turnarounds in the European market.