JPM Europe Equity Research Today’s Morning Meeting

Europe First to Market 29 July 2026

Today’s Morning Meeting | Also Published Today | Key Changes | JPM Events | Upcoming Earnings

Today’s Morning Meeting | Sika (Elodie Rall) (SIKA SW, OW)

‘Show-me’ story executing well; upgrade to OW

We upgrade Sika to OW as we see improving execution with a strong Q2 building on a better-than-expected Q1 and an end to the downgrade cycle, which we had seen in recent years. We also think an improving H2 outlook leaves scope for earnings upgrades later this year and though the company confirmed it was happy with current absolute consensus EBITDA expectations, should the company meet the upper-end of top-line (which we see as quite conservative given it implies an undemanding H2 against an easier comparative base) and margin guidance, this would imply EBITDA of ~CHF2,240m, which is ~4% above consensus. Furthermore, the group has pro-actively managed to mitigate cost inflation with good price increases and in a scenario of deflationary trends, Sika should benefit from favorable price/cost trends as it will likely keep some pricing (we explored this in a recent note here). Whilst some of the above has been reflected in the recent share price move (+10% yesterday) this is in the context of the shares underperforming the lightside sector by ~30ppt since 2024 and de-rating from ~20x EV/EBITDA to ~14x currently. More broadly, as we highlighted in our recent sector report (here), we are incrementally warming up to the Lightside sub-sector as we start to see an inflection in volume trends; in particular across Europe and Sika’s Q2 trends showed evidence of this with volumes increasing over 4% (we also see yesterday’s results as a positive read-across for the other lightside companies, such as Saint-Gobain). Our revised PT is now CHF215, which increases from CHF165, which is as a result of slightly higher earnings estimates and tweaking the multiple used in our PT methodology back to its long- run average (~16x; though remains below previous highs) on account of earnings momentum now accelerating and credibility starting to return.

AFL | Orange SA (Akhil Dattani) (ORA FP, OW)

Yesterday’s results underscore Orange’s operational strength. Still multiple legs to the equity story

Against the backdrop of a 14% sell-off from its mid-May record highs, yesterday’s results served as a timely reminder of the resilience of Orange’s operational performance, and why we continue to see material ongoing upside ahead: (1) Q2 delivered another “beat and raise”. Impressively, H1 overall saw Orange report revenues +4%, EBITDA +5% and EPS +11%, (2) We see these trends as sustainable. This implies upside risk to management’s already ambitious 2028 CMD targets, (3) Simply taking 2028E guidance positions Orange on an enviable 11% EFCF yield. This is before considering likely forecast upgrades, cost synergies associated with the SFR deal, and potential longer-term market repair. Put together, Orange still remains on the JPMorgan AFL as our top sector pick.

Safran (David H Perry, CFA) (SAF FP, OW)

Raising PT to EUR 430 on higher EPS estimates

EMEA Equity Research AC Europe Equity Research ( July 2026 JPMORGAN

Following SAF’s better-than-expected H1 26 results (Table 1) we increase our 2026-30E EPS by 2% / 6% / 5% / 6% / 8%. (The increase is lower in 2026 due to some unexpected items below Adj. EBIT as shown in Table 1.) We also increase our FCF forecasts for 2026-30. The conference call was very bullish in our view. SAF said it saw structural tailwinds in its aftermarket sales in 2027 and 2028 (due to an improved supply chain) and it also said there was upward pressure to its existing medium- term guidance (ie. 2028 Adj. EBIT of €7.0-7.5bn). We now forecast 2028 Ad. EBIT of €8.3bn and we would be surprised if consensus doesn’t move to a similar place. Reflecting our higher EPS and FCF estimates we increase our multiples-based Dec-27 PT by 8% to €430, for 25% potential upside over the next 17 months.

Saipem (Alejandra Magana) (SPM IM, OW)

Looking Through the Near-Term Noise

Saipem shares fell ~9% following a challenging 2Q26 result and a €150m reduction to FY26 EBITDA guidance, with the quarter itself also containing significant noise…