Jefferies Eyes European Mid-Cap Upside in H2, Shuffles Top Picks

Investment bank Jefferies has identified growing opportunities among European mid-cap stocks for the second half of 2026, citing a positive second-quarter earnings season that has bolstered order intake, momentum, and earnings visibility across the sector.

In a research note, the firm stated that positive Q2 surprises have supported material estimate increases across much of its coverage universe, leading to a reshuffle of its preferred stocks.

Top Picks and Sector Opportunities

Jefferies has adjusted its top picks for the DACH region (Germany, Austria, and Switzerland), highlighting several companies with favorable outlooks.

• Redcare Pharmacy is now a preferred name at its current valuation.
• Bilfinger and Inficon remain top picks for the second half, with Jefferies noting Inficon's strong operational recovery following prior tariff and currency headwinds.

Other companies were highlighted for specific growth drivers. Systemair stands out after its adjusted EBIT beat consensus estimates by 4%, supported by rising exposure to data-center cooling amid increased AI-related spending. Volex maintains a 'Buy' rating after it raised its full-year guidance early in its fiscal year, prompting Jefferies to lift forecasts through fiscal 2029.

Valuation and Strategic Focus

Ad

Jefferies also pointed to opportunities based on valuation and strategic positioning. Acerinox remains a preferred name, with its price target raised to €22 on the back of a more U.S.-focused earnings mix and improving conditions in Europe.

Meanwhile, Everplay is presented as a valuation play. The company's shares trade at 6.5 times expected EBITDA, well below a historical average in the mid-teens, with approximately 80% of its forecast fiscal 2026 EBITDA weighted to the second half.

A More Selective Stance

Despite the optimistic outlook, the investment firm noted it has become more selective following significant share-price movements in the sector.

Reflecting this approach, DocMorris was downgraded to 'Hold' after its stock surged more than 80% this year. Similarly, Nagarro was cut to 'Hold,' as Jefferies expects a pending €81-per-share takeover offer from Persistent to proceed.