These are Top European Life Sciences Stocks as per Barclays Rankings

Investing.com -- European life sciences stocks have faced challenges in 2025, with Q2 top-line disappointments raising concerns about pricing power and structural market changes.

However, Barclays analysts believe the recent de-rating since June may present buying opportunities, particularly as volume comparisons ease in Q4 2025 and growth potentially improves heading into 2026.

Consumer ingredients companies with diversified exposure to local and regional customers appear better positioned to defend against pricing pressures and potential AI disintermediation from larger customers.

While packaged food markets face structural challenges, companies with significant exposure to non-food end markets (50%+ for several players) may be more insulated from these headwinds.

According to Barclays’ latest rankings, these are the top European life sciences stocks to watch:

1. DSM-Firmenich: Leading Barclays’ rankings, DSM-Firmenich stands out in the European life sciences sector. The company’s diversified portfolio across consumer ingredients provides strong defensive positioning against market challenges.

Barclays highlights its exposure to the growing segment of local and regional customers who are increasingly winning market share in FMCG end markets. The company is well-positioned to benefit from potential sequential improvement in top-line growth expected in Q4 and into 2026.

In a recent update, DSM-Firmenich reported second-quarter adjusted EBITDA of €610 million, meeting analyst consensus. The company also posted 6% organic growth year-over-year, driven by increases in both volume and price.

2. Kerry Group: Ranking second in Barclays’ assessment, Kerry Group demonstrates resilience despite industry headwinds. The company’s strength in reformulation capabilities aligns well with the trend toward healthier and "cleaner label" products, which could offset some pressure in the packaged food segment.

Kerry’s diversified customer base helps mitigate concerns about pricing power and AI disintermediation that have affected the broader sector following Q2 disappointments.

3. Novonesis: Completing Barclays’ top three, Novonesis benefits from having over 50% exposure to non-food end markets, reducing its vulnerability to structural challenges in packaged food segments. The company is positioned to capitalize on easing volume comparisons expected from Q4 2025.

Barclays notes that Novonesis’s innovation capabilities in reformulation requirements for healthier products provide additional growth potential as consumer preferences continue to evolve.

As volume comparisons ease for most consumer ingredients companies from Q4 2025, Barclays anticipates sequential improvement in top-line growth rates.

While acknowledging legitimate concerns about recent performance, their analysis suggests the current valuation levels may present opportunities for investors willing to look beyond near-term challenges toward improving fundamentals in 2026.

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