Jefferies Identifies Buying Opportunities in European Energy Stocks Lagging Post-Conflict Rally

Geopolitical tensions following the Iran conflict have created a sharp performance divide among European energy stocks, with several large-cap and oilfield service companies now trading at a discount that presents a buying opportunity, according to a new analysis from Jefferies.

The brokerage notes that since the conflict erupted in late February, investors have rewarded companies seen as direct beneficiaries of stronger oil and gas prices, while others have lagged despite sound fundamentals.

A Widening Performance Gap

Jefferies highlighted a growing divide between stocks whose recent gains are supported by improving earnings and those that appear unfairly penalized. The firm pointed to several integrated oil companies that have performed strongly due to specific fundamental drivers.

• Neste Oyj has rallied 33%, boosted by stronger diesel prices and supportive regulations for renewable fuels.
• Repsol is up 17%, with Jefferies citing the potential for an upgraded share buyback program and improving prospects in Venezuela.
• Equinor ASA has gained 13%, supported by firmer European natural gas prices and a clearer strategic outlook.

'Oversold' Laggards Present Opportunity

Ad

In contrast to the rally in select names, Jefferies argued that several heavyweight energy firms have been left behind. The brokerage identified these companies as potential "oversold" opportunities for investors.

Among its preferred names is Shell PLC, whose recent acquisition of ARC Resources assets extends its reserve life and strengthens the case for a final investment decision on its Canada LNG project. TotalEnergies SE was also described as oversold, with its diversified portfolio helping to mitigate Middle East risks. The analysis also noted Ithaca Energy PLC for its greater flexibility to pursue acquisitions.

E&P and Service Sector Divergence

The report identified a similar trend in the exploration and production (E&P) space. While Vår Energi (+15%) and Tullow Oil (+11%) have advanced on positive company-specific news, Jefferies said peers like Serica Energy, Harbour Energy, and Kosmos Energy now look oversold despite improving balance sheets and strategic progress.

Opportunities were also flagged in the oilfield services sector. Companies including Maire, Technip Energies, GTT, and TechnipFMC have underperformed despite healthy order pipelines and limited direct disruption from the conflict. Jefferies suggested they could benefit from accelerated regional reconstruction spending once tensions ease.