Investing.com — Jefferies analysts identified seven major themes tied to the European Commission’s new five-year policy priorities under Ursula von der Leyen’s continued leadership.
These priorities, announced following Jefferies’ recent field trip to Brussels, could have significant implications for European industries and equities.
Defense: With growing pressure for NATO members to boost spending, especially in Poland and Italy, Jefferies expects a shift towards strengthening Europe’s military capabilities. Analysts favor Thales (EPA:TCFP) and Babcock for their limited exposure to the Ukraine conflict, alongside Avon Technologies and Chemring (LON:CHG) in UK industrials.
Agriculture and Chemicals: In response to farmer protests, Jefferies notes the EU has adopted a less restrictive stance on agriculture, reducing risks for pesticide leaders like Bayer (OTC:BAYRY) and Corteva (NYSE:CTVA).
They believe the shift towards bio-based pest controls and New Genome Techniques (NGTs) offers growth opportunities for Bayer and KWS Saat.
Energy and Climate: Lowering energy costs is seen as a top EU priority, with renewable energy seen as the solution.
Jefferies explains that the upcoming Clean Industrial Deal aims to boost Europe’s competitiveness, with Heidelberg (ETR:HDDG) Materials positioned well in CO2 capture and storage technologies.
PFAS Removal: Legal and insurance risks surrounding PFAS restrictions could affect liability underwriters. However, Jefferies notes minimal exposure for AXA.
Climate Change Adaptation: Rising government investments in resilience projects are said to benefit companies like Saint-Gobain, Genuit, and Systemair, which specialize in adaptation solutions.
Autos: The German auto lobby is advocating for lifecycle emissions regulations and support for e-fuels. Jefferies highlights Stellantis (NYSE:STLA) as well-positioned, while VW lags. Fastned is favored for EV charging infrastructure.
EU Deforestation Regulation (EUDR): Food and HPC companies are advancing in sourcing deforestation-free materials, though Jefferies says Nestlé faces challenges with cocoa compliance.