Jefferies adds five names to top franchise picks list

Investing.com -- Jefferies has added five new stocks to its EMEA Franchise Picks list, selecting Assa Abloy (ST:ASSAb), British American Tobacco (NYSE:BTI), Infineon (OTC:IFNNY) Technologies (ETR:IFXGn), Stellantis (NYSE:STLA), and UBS Group (NYSE:UBS) as fresh high-conviction ideas.

The list now comprises 15 names, representing Jefferies’ most differentiated Buy-rated calls across liquid European stocks.

For Assa Abloy, the brokerage highlights signs of recovery in its cyclical businesses and sees margin resilience, disciplined pricing, and M&A momentum as key strengths.

“Assa Abloy trades at 15x/14x 2025/26 EBITA - at the low end of its historical range (14.5–20x) and at a 15% discount to high-quality peers, despite superior fundamentals,” analysts led by Raj Jilka highlighted.

The team sees a path toward revenue growth of more than 9%, supported by stabilizing residential markets and bolt-on deals.

For British American Tobacco, Jefferies said it sees progress in Next-Generation Products (NGPs), emerging market strength, and deleveraging supporting attractive returns.

The analysts believe BAT’s transformation is underappreciated. “Velo’s U.S. relaunch has driven triple-digit year-over-year (YoY) growth,” and adds that Vuse and glo also remain key parts of the diversified product mix.

“The company has also delivered consistent margin expansion despite heavy investment in NGPs, underpinned by cost discipline and operational leverage. With a healthier balance sheet, BAT (LON:BATS) is well-positioned to increase shareholder returns,” the note states.

Infineon’s inclusion reflects its positioning in structural growth areas like EVs, renewable energy, and AI data centers.

Jefferies notes its AI power revenue could reach over €1 billion by fiscal year 2027 (FY27) and sees upside from design wins in China. “Infineon’s AI exposure is underappreciated,” the analysts write, citing strong demand from Nvidia (NASDAQ:NVDA) and Broadcom (NASDAQ:AVGO).

Stellantis joins the list as Jefferies analysts believe the stock is at an inflection point, driven by a new CEO and strategic shift.

The analysts expect operational improvements and a potential cyclical recovery, with the stock trading well below peers. They believe the market “underestimates STLA’s ability to return to or exceed pre-merger margins.”

UBS rounds out the new additions, with Jefferies expecting its recent underperformance to reverse as the market better appreciates capital generation.

The brokerage flags strong momentum in Global Wealth Management and a faster-than-expected wind-down of the Non-Core unit. UBS is projected to return 27% of its market cap to shareholders by 2027.

“With more clarity on capital returns post the June update from the Federal Council, we think the shares can start to re-rate combined with a re-assessment of wealth & capital markets names into year-end,” Jefferies wrote.

Prior to this update, the Franchise Picks list already included names such as ABI, Air Liquide (OTC:AIQUY), Compass Group PLC (LON:CPG), Daimler Truck Holding AG (ETR:DTGGe), Glencore (OTC:GLNCY), Lonza Group AG (SIX:LONN), London Stock Exchange Group PLC (LON:LSEG), National Grid (LON:NG), Compagnie de Saint Gobain SA (EPA:SGOB), and Société Générale (EPA:SOGN).