Top European Industrial Stocks: UBS Ranks Schneider, GEA, and Kone as Buys

Investing.com -- European industrial stocks are showing resilience despite mixed market conditions, with several standouts earning Buy ratings from UBS analysts. The investment bank has identified Schneider Electric, GEA Group, and Kone as top performers in the sector, citing strong fundamentals and growth potential.

Schneider Electric received a price target of €280. UBS forecasts Schneider to deliver 9.4% organic growth in Q3 2025, with Energy Management growing at 10.6% and Industrial Automation at 3.8%.

This represents an improvement from the 8.3% growth in Q2, driven by expected sequential improvements in Data Centers, Discrete Industrial Automation, and AVEVA.

Management is expected to maintain current guidance of 7-10% organic sales growth and 50-80 basis points of organic margin improvement, despite approximately 40 basis points of foreign exchange headwinds, analysts said.

The recent 2% USD depreciation against EUR could create an additional 30 basis points headwind to sales, they added.

Key growth drivers include strong data center demand, solid non-residential performance, continuing short-cycle recovery, and better H2 seasonality for AVEVA. While residential markets have weakened in China and the US, they remain solid in Europe.

GEA Group has a price target of €73. GEA’s recent communications indicated positive demand in food, dairy, and pharmaceutical segments, which represent the majority of the company’s business. The outlook was less optimistic for beverages and new food, but these only account for 13% of sales.

The company anticipates organic sales growth acceleration in Q3 compared to H1 and expressed confidence in margins. A significant dairy contract from Algeria will be booked in Q4 rather than Q3, which may affect quarterly order intake patterns.

UBS notes that the market has been largely indifferent to GEA’s stock recently, despite the company’s positive demand outlook in key segments that compares favorably to most sectors outside defense and AI.

GEA Group announced a significant reorganization that includes a leaner management structure. As part of the changes, CEO Stefan Klebert has extended his contract by two years to 2028, while the company’s CFO and COO will be departing.

Kone was also included in the list, with a price target of €65. UBS forecasts 3% ex-FX orders growth for Kone, with approximately 6% ex-FX revenue growth and an adjusted EBIT margin of 12.5%, up 20 basis points year-over-year.

The bank’s estimates exceed consensus, particularly on adjusted EBIT, where UBS is approximately 5% ahead.

This optimism is driven by expectations for continued double-digit growth in Maintenance and Modernisation businesses, while consensus anticipates growth slowing to around 8%. UBS also projects a 30 basis points higher adjusted EBIT margin than consensus.

The company faces mixed regional conditions, with volatile new construction in North America, challenging conditions in China, mixed activity in Europe, and growth opportunities in APAC and the Middle East. Self-help measures are expected to begin showing results by year-end.

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