Goldman Sachs adds two, drops three in European conviction list July shake-up

Goldman Sachs’ July 2026 Directors’ Cut added TGS ASA and Halma Plc to its European Conviction List, lifting the list’s median 12-month total return potential to 32% and median upside to price targets of 29%. For TGS, the firm set a 12-month target of 180 NOK vs a 128.90 NOK close (≈40% upside) and expects multi-client revenues (≈60% of sales) to grow 19% YoY in FY2026 versus 8% consensus. For Halma, the 12-month target is 5,010 pence vs a 3,934 pence close (≈27% upside), supported by projected >14% EPS growth over three years and strong Photonics expansion, despite noting a ~15% post-FY2026 dip tied to guidance disappointment.

Analysis

The real signal is a late-cycle rotation toward names with visible self-help and underappreciated duration, not a broad-market call. TGSGY is the cleaner cyclical lever: seismic pricing should inflect before offshore E&P budgets do, because exploration spend tends to recover first when boards regain confidence in reserve replacement. The setup is unusually tight—limited vessel capacity means even modest demand improvement can translate into outsized utilization and pricing, so the earnings beta is higher than the headline market cap suggests.

HALMY is a different kind of compounder trade: it is less about near-term macro and more about scarcity value in European quality growth. The risk is that investors are already paying up for defensive compounding, so the stock can look expensive until the market regains confidence in mid-single-digit industrial growth; the pullback described by the broker is more important than the rating itself. If rates stay higher for longer, the multiple may not expand much, but the earnings path should still be resilient versus broader UK industrials.

The removals matter mainly as a flow signal. BAYRY has likely seen part of the litigation overhang re-rated already, so incremental upside may slow unless there is another legal or balance-sheet catalyst; BUD and DTEGY look like fading sponsor names rather than obvious shorts, but they lose marginal conviction-buyer support. The contrarian miss is timing: the market may be pricing an oil capex rebound too early, so TGSGY is a call option on a 6-18 month budget cycle, not a next-quarter trade.

Key Decisions for Investors

• Long TGSGY on 1-3 month weakness; target 15-25% upside over 12 months, with thesis invalidation if offshore E&P capex surveys or Brent trend materially lower for two consecutive months.
• Long HALMY on any post-earnings consolidation; expect mid-teens total return over 12 months, but cut if Photonics growth or acquisition integration disappoints for two reporting periods.
• Pair trade: long HALMY / short DTEGY over 3-6 months to express quality-growth compounding versus low-growth, capital-intensive defensiveness; aim for modest relative outperformance rather than absolute beta.
• Reduce or avoid adding to BAYRY after the litigation rerating unless a new catalyst emerges; upside likely shifts from multiple expansion to execution, so risk/reward is less compelling than TGSGY or HALMY.
• Treat BUD as a hold/trim rather than a fresh short; removal from conviction lists is a flow-negative, but without a demand or margin catalyst the setup is more likely range-bound than directional.