Street Calls of the Week
Investing.com -- European companies are entering the final stretch of 2025 with substantial buyback firepower still intact, after a summer of record announcements and strong execution.
“Buybacks continue to underpin EU equities amid persistent macro noise,” Barclays strategists led by Emmanuel Makonga said in a note, with activity led by Financials and supported by Energy and Industrials.
July marked the strongest month on record for new buyback announcements at €49.5 billion, and momentum carried into August with financial firms accounting for 3.5% of sector trading volume through repurchases.
Nearly half of the 2025 programmes remain unexecuted, signaling that “the execution pipeline still looks full” heading into year-end. Barclays’ model projects financials and energy as the most active sectors for new announcements in the fourth quarter.
Buybacks are proving to be a meaningful driver of shareholder returns. Year to date, repurchases have delivered a 1.3% yield for the STOXX 600, equivalent to about 40% of the index’s total shareholder yield.
The MSCI Europe share count has fallen to its lowest level in a decade, reflecting the sustained pace of equity supply reduction.
Earnings per share (EPS) downgrades have also moderated as euro area PMIs rebound, a backdrop that Barclays said bodes well for capital returns.
Barclays’ buyback announcements basket, which has outperformed broader markets through the summer, was recently rebalanced to increase exposure to financials, energy, and utilities.
The bank pointed out that companies executing more than 10% of their daily trading volume in buybacks have consistently outperformed since June.
Stocks have typically struggled during blackout periods, only to rebound when buybacks resumed, Barclays added.
Regional divergences are emerging, however. Norway, the U.K., and Portugal have posted the highest total yields, while France faces headwinds after last year’s introduction of an 8% levy on buybacks.
Strategists said that the share of French companies announcing new programmes has already fallen in 2025; however, outside France, the team sees “little risk of new buybacks levies being announced”.
Despite volatile government bond markets and ongoing fiscal concerns, corporate credit conditions remain stable, allowing firms to continue repurchase programmes without pressure from funding costs.
For now, Barclays argues that equities “offer a more compelling valuation story than credit,” with buybacks set to remain a critical pillar of European shareholder returns into 2026.