Defense, Novo and Nestle: 2024 Highs and Lows in European Stocks

(Bloomberg) — A big rally in defense stocks, deal-fueled gains in banks and a surge in Siemens Energy AG shares were among the main highlights for European stocks in 2024, a year that again saw the region struggle to keep pace with the US.

Many of Europe’s biggest names were stuck in the doldrums, including luxury bellwether LVMH Moet Hennessy Louis Vuitton SA and foodmaker Nestle SA, whose shares are set for their biggest annual drop on record. Like LVMH, automakers such as Stellantis NV were weighed down by China worries, while obesity-drug hype started to fade, evidenced by Novo Nordisk A/S surrendering a more than 40% gain in the first half of the year.

“European equities are pricing quite a lot of bad news,” said Aliki Rouffiac, sustainable portfolio manager at Robeco. “We see, under our base case scenario, some valuation potential to be unlocked in 2025.”

Here’s a look at some of the biggest winners and losers of 2024:

Siemens Energy AG’s 317% surge eclipsed all other Stoxx Europe 600 members, its gains even surpassing Nvidia Corp. in dollar terms. The German renewable-energy giant saw growth in its grid technologies division offset weakness in its wind turbine business, leaving rivals Iberdrola SA and Enel SpA in the dust, from a stock-market perspective.

It was a rough year for luxury stocks. The market value of LVMH — not long ago the largest company in Europe — slid by about €50 billion ($52 billion) as concern around lower Chinese demand intensified.

And Gucci-owner Kering SA hit its lowest level since 2017 as its sales outlook disappointed investors again. “The work to support the brand’s comeback is still in progress, with little signs so far of an imminent positive inflection,” JPMorgan Chase & Co. analyst Chiara Battistini said in a note.

The conflicts in Ukraine and the Middle East supported defense stocks, while Donald Trump’s US election victory signaled potential pressure on NATO member states to increase their spending. Norwegian firm Kongsberg Gruppen ASA was up about 178% for the year, while Germany’s Rheinmetall AG also saw triple-digit gains.

However, BAE Systems trimmed its rally in the final two months of the year, with Bank of America Corp. analysts downgrading the British defense-equipment manufacturer due to the risk of potential US government spending cuts overseen by Elon Musk.

Banking was Europe’s best-performing sector this year, with the Stoxx subindex rising 25%, powered by higher interest rates that are fueling shareholder returns. Banca Monte dei Paschi di Siena SpA led the rally, more than doubling as the Italian lender resumed dividend payments after 13 years and as domestic rival Banco BPM SpA took a stake as part of a government privatization.

Deals also provided fuel for gains. UniCredit SpA began a pursuit of Commerzbank AG, while Banco Bilbao Vizcaya Argentaria SA made a hostile takeover offer for smaller Spanish rival Banco Sabadell SA.

“Everything that could go right went right for banks,” said Marija Veitmane, head of equity strategy at State Street Global Markets.

Stellantis Leads Auto Losses

The autos sector was hurt by the growing strength of Chinese competitors like BYD Company Ltd while US president-elect Trump touted his tariff-centric economic plan post-election, compounding the sector’s woes. The Stoxx auto index is down 12% year-to-date versus the broader benchmark’s 5.9% gain.

Stellantis NV was the sector’s biggest faller, dropping 40% amid a plunge in US sales and the departure of both Chief Executive Officer Carlos Tavares and Chief Financial Officer Natalie Knight within a few months.

Novo Nordisk A/S faced some year-end volatility as data from its experimental obesity drug disappointed. Patients on CagriSema lost an average of 20.4% of their body weight over 68 weeks in a study, less than the 25% that the company had predicted. The stock cratered a record 29% within the first hour of the news and has since partially recovered.

“The Novo obesity bubble has well and truly burst,” Intron Health analyst Naresh Chouhan said in a note to clients. The shares are now down 8.9% year-to-date.

UCB’s Blockbuster Potential

Weight-loss medicines weren’t the only drugs catching investor attention. Belgian biotech company UCB SA’s shares have more than doubled in 2024, largely reflecting optimism around the blockbuster potential of the skin disease treatment Bimzelx. 

The rally also fueled gains in Financiere de Tubize SA, a listed investment vehicle for the family of Emmanuel Janssen, who founded UCB as a Belgian chemical producer almost 100 years ago.

–With assistance from Jonas Ekblom, Lisa Pham, Kit Rees and Bre Bradham.

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