NEW YORK (dpa-AFX) - After four years of underperformance, shares of small and mid-sized European companies (SMID) have better prospects in 2025, according to investment firm Jefferies. Last year, the discrepancies were clearly reflected in the German stock market, where the Dax gained around 19 percent, while the indices in the second and third tiers of the stock market suffered losses. The MDax had even lost almost six percent in 2024.

According to an outlook presented on Monday, the experts at the US analysis company do not fear a "hard landing" of global economic growth. Therefore, cyclical stocks in particular have the potential for a significant recovery. The end of the interest rate cycle and the development of corporate cash flows also offered opportunities.

The analysts justify their new "buy" recommendation for PVA TePla with the improved risk/reward profile following the recent price decline. The technology company, which is listed on the German small cap index SDax, is a candidate for recovery that should benefit from the certification of measurement technology devices for major customers and higher overall spending in the semiconductor industry.

The fact that neighboring index member SMA Solar is now a buy is justified by the historically low share price after a three-quarters decline in value last year. In view of the significantly lower consensus estimates for 2025, the recovery in demand for the photovoltaic group's shares, which is not expected before the third quarter, appears to be priced in. At the same time, the annual pipeline looks decent. Despite the remaining risks, for example due to political changes in the US, local industry representatives remain optimistic about the market for battery storage.

Jefferies remains positive for Nordex and Sixt. The wind turbine manufacturer from the MDax of medium-sized German companies offers an attractive risk-reward profile thanks to a well-filled order book, improved profitability and record cash holdings. The experts see an attractive entry opportunity for car rental company Sixt in view of the good prospects for the travel industry and the favorable valuation.

On the other hand, Jefferies removed the previous buy votes for Verbio, SGL and Flatexdegiro. The experts see balance sheet risks for biofuels manufacturer Verbio due to possible write-offs on emission certificates. Although the price weakness actually suggests that the opportunities and risks are now more balanced. However, the prices of certificates remain at a low level despite the climate policy efforts of the outgoing German government. Furthermore, it is not known how many of these certificates Verbio holds.

The analysts are becoming increasingly cautious about the carbon fiber specialist SGL because they do not expect demand to recover for the time being. The company itself expects prices to remain low and is considering selling its carbon fiber business. At online broker Flatexdegiro, the experts expect 2025 to be a transition year with moderate earnings potential, especially as the declining interest surplus should also create headwinds.

In line with their "Buy" rating, the analysts at Jefferies expect the share to achieve a total return (price gain + dividend) of at least 15 percent over a twelve-month period. A "Hold" rating indicates that a total return of up to 15 percent is possible, but also a price loss of up to 10 percent./gl/tih/mis

Analyzing institute Jefferies.

Publication of the original study: 12.01.2025 / 13:53 / ET

First publication of the original study: January 12, 2025 / 1:53 p.m. / ET