While U.S. equity markets have passed 2011 highs, mainland Europe indexes have failed to recover from the sell-off during the second half of 2011.
Despite concerns about the potential for bailouts beyond Greece, Ireland and Portugal, analysts appear bullish on Spanish and Italian stocks represented in the MSCI EMU index.
Euro-area GDP growth is forecast to be -0.4% and 0.9% in 2012 and 2013, respectively. Traditionally defensive sectors like consumer staples and health care have the lowest upside, indicating that markets have already priced in the macro outlook.
Analysts like Hellenic Telecom, despite its huge losses in the past year. Three of the five stocks in the MSCI EMU index with the greatest downside target consensus were banks.