A stronger-than-expected economic growth, the return of inflation and EU financial sector in an optimal state has prompted Morgan Stanley to raise its profit forecasts and targets for European stock indices.
Currently, the U.S. bank expects earnings growth of 16% in 2017 per share for the MSCI Europe, while the index will grow by 8% for the next 12 months.
For the FTSE 100, the broker expects a 24% EPS increase and sees the index reaching 7.700 points.
Among risks investors have to watch Morgan Stanley noted low volatility and technically overbought levels. At the same time, the improvement of the fundamental background is a good sign for the shares.