Jefferies Sees Buying Opportunities in 'Oversold' European Energy Stocks

Recent conflict in Iran has created a sharp divergence in the performance of European energy stocks, leading to selective buying opportunities in companies that appear oversold despite strong fundamentals, according to a new analysis from Jefferies.

A Widening Performance Gap

Analysts at the brokerage noted that since the conflict began in late February, investors have primarily rewarded companies seen as direct beneficiaries of higher oil and gas prices. This has created a growing divide between stocks whose gains are supported by improving earnings and others that have lagged without significant operational exposure to the conflict.

Among the top performers cited by Jefferies are:

• Neste Oyj, which has rallied 33% on the back of stronger diesel prices and supportive renewable fuel regulations.
• Repsol, up 17%, buoyed by the prospect of an upgraded share buyback program.
• Equinor ASA, which has climbed 13% amid firmer European gas prices and a clearer strategic outlook.

'Oversold' Large-Caps and E&P Firms

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In contrast, Jefferies argued that several heavyweight energy firms have been unfairly punished. The brokerage identified Shell PLC as a preferred oversold opportunity, highlighting that its recent acquisition of ARC Resources assets extends its reserve life and strengthens the case for its Canada LNG project.

TotalEnergies SE was also described as oversold, with its diversified portfolio seen as a buffer against Middle East risks. In the exploration and production (E&P) space, Jefferies said firms including Serica Energy, Harbour Energy, and Kosmos Energy now look attractive given their improving balance sheets and strategic progress.

Oilfield Services Underperformance

Jefferies also pointed to opportunities in the oilfield services sector. Companies such as Maire, Technip Energies, and TechnipFMC have underperformed despite having limited direct disruption from the conflict and maintaining healthy order pipelines.

The brokerage suggested these service companies could benefit from an acceleration in regional reconstruction spending once geopolitical tensions subside. Jefferies concluded that the broad dispersion in share performance has created compelling entry points for investors across the European energy landscape.