Jefferies Sees Buying Opportunities in 'Oversold' European Energy Stocks

A sharp divergence in the performance of European energy stocks since the Iran conflict began has created significant buying opportunities among companies that have been unfairly penalized by investors, according to a new analysis from investment bank Jefferies.

The brokerage notes that while some stocks have rallied on the back of higher oil and gas prices, several fundamentally sound companies, including sector heavyweights, now appear oversold.

A Widening Performance Gap

Jefferies highlighted a clear split in the market since geopolitical tensions escalated in late February. Investors have rewarded companies perceived as direct beneficiaries of stronger commodity prices, while others have lagged.

Standout performers cited by the bank include:

• Neste Oyj, which has rallied 33% due to stronger diesel prices and favorable renewable fuel regulations.
• Repsol, up 17%, supported by the potential for an upgraded share buyback program.
• Equinor ASA, which has climbed 13% on firmer European natural gas prices.

Identifying 'Oversold' Opportunities

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In contrast, Jefferies argued that several major energy firms have underperformed despite resilient fundamentals and limited operational exposure to the conflict. The bank identified Shell PLC and TotalEnergies SE as preferred oversold opportunities among integrated oil companies.

Jefferies noted that Shell's recent acquisition of ARC Resources assets extends its reserve life and strengthens the case for its Canada LNG project. Meanwhile, TotalEnergies' diversified portfolio has helped insulate it from Middle East risks. The bank also pointed to opportunities in the exploration and production (E&P) space, flagging Serica Energy, Harbour Energy, and Kosmos Energy as oversold despite their improving balance sheets.

Oilfield Services and Market Outlook

Opportunities also exist among oilfield service companies, according to the note. Firms like Maire, Technip Energies, and TechnipFMC have underperformed despite healthy order pipelines and limited disruption from the conflict.

Jefferies concluded that the broad dispersion in stock performance reflects a market debate over which companies deserve a geopolitical premium. This has left several fundamentally strong businesses trading at a discount, creating value for discerning investors.