Bank of America: EU Companies Lower Guidance to Five-Year Low

LootboxPhobia · 2026-03-12T23:55:04+00:00

Bank of America data shows that the number of European companies lowering their financial guidance has fallen to a five-year low, primarily due to weak demand and internal challenges. Although the proportion of companies raising outlooks has improved, the Middle East conflict has made enterprises adopt a cautious stance on prospects. Rising energy prices may impact earnings, particularly in sectors such as construction, tourism, and utilities. Despite this, European equity funds continue to attract new capital inflows.

LootboxPhobia

2026-03-12 23:55:04

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Investing.com - U.S. bank data shows that the number of European companies lowering guidance has fallen to its lowest level in five years, with weak demand and unfavorable factors faced by companies considered the main drivers.

U.S. bank strategist Paulina Strzelinska stated in a report: “In the fourth quarter of 2025, there were 16 guidance downgrades and 3 profit warnings, the lowest since the first quarter of 2021.”

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Meanwhile, the proportion of companies raising outlooks has improved. Strzelinska pointed out: “The proportion of upward revisions to total adjustments is 0.63, the highest since the second quarter of 2023.”

Although the number of guidance downgrades so far remains relatively limited, companies remain cautious about the overall outlook as the Middle East conflict escalates.

According to Strzelinska, most companies say it is too early to assess the impact of the conflict on operations, and the results will largely depend on how long the disruption lasts.

An exception mentioned by the strategist is Wizz Air, which warned that the situation could pressure its performance. The airline expects that net profit related to the conflict could be impacted by 50 million euros.

U.S. banks also studied the potential impact of a sharp rise in energy costs on earnings. In a scenario where energy prices increase by 50%, the bank estimates that consensus earnings per share in European stocks could decline slightly by 2026, with Europe Stoxx 600 expected to fall about 1.7%, and MSCI Europe about 3.8%.

The bank’s scenario analysis shows that the sectors most affected are construction and materials, travel and leisure, and utilities, while stocks in Spain and those with higher globalization levels may also suffer the greatest earnings impact due to rising energy prices.

Meanwhile, capital inflows into the region remain supportive. U.S. banks noted that last week, European equity funds saw an inflow of $820 million, with passive funds continuing to attract most demand, while active funds experienced further outflows.

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