We recently published a list of 10 Top Performing European Stocks Heading into 2025. In this article, we are going to take a look at where Merus N.V. (NASDAQ:MRUS) stands against other top performing European stocks.
As per Deloitte, inflation in the Eurozone slightly rebounded in October but was still quite low. The consumer price index increased 2% in October as compared to the year earlier. While this was slightly up from the low of 1.7% of inflation in September, this was the lowest since June 2021. For the ECB, the increase to 2% should not be worrisome. This is because the ECB’s target is 2%.
As per the World Economic Forum, European households continue to save at their highest rates in years, with saving rates in the eurozone exceeding the pre-pandemic levels. In Q2 2024, the saving rate in Europe came in at 15.7%, reflecting an increase from the 15.2% rate that was seen in the quarter prior, as per Eurostat (the statistical office of the EU). In its latest economic forecast, the European Commission mentioned that GDP growth in 2024 is expected to be 1% in the European Union. Furthermore, the growth should improve to 1.6% in 2025.
Impact of Trump’s Presidency on Europe’s Economic Growth
As per Goldman Sachs, Europe might face a big hit to economic growth as trade tensions rise. These tensions are fueled by Trump’s proposal for sweeping tariffs on all of the US imports. The large bank added that the actual magnitude of tariff increases might be less of a matter of worry as compared to the uncertainty that is created by threatening to impose tariffs on Europe. While Mr. Trump’s 10% across-the-board tariff poses a clear risk, Goldman Sachs expects the incoming President to initiate a more moderate set of duties on European countries.
These tariffs will be targeted towards auto exports, which are worth $80 billion, or 0.9% of EU exports. The duties are expected to have a significant impact on GDP in Germany, Sweden, and Switzerland in particular. ECB president had earlier mentioned that, if Trump wins, it will be a threat to Europe due to his tariff ideas, NATO commitment, and climate change policies.
READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.
Pathway For Rate Cuts and Inflation
The Bank of England decided to cut the interest rates by 25 basis points and mentioned that expected reductions would be gradual. This is because of the expectations that the British government’s first budget might lead to increased inflation and economic growth. As per Reuters, BoE mentioned that inflation is expected to rise to ~2.5% by the end of 2024 from 1.7% in September and 2.7% by 2025 end before declining gradually below its 2% target in mid-2027.
The Government’s decisions to raise a cap on bus fares, higher value-added tax on private school fees, and increase employers’ social security contributions are some of the measures that might fuel inflation.
Amidst the uncertainties about the Trump Administration’s policies, Wall Street analysts opine that investors are required to bet on stocks that have a proven track record and that are expected to grow in the near future.
A scientist looking through a microscope conducting research in an immuno-oncology lab.
Our Methodology
To list the 10 Top Performing European Stocks Heading into 2025, we used a screener and sifted through online rankings to extract the European stocks. After getting the initial list of 20-25 stocks, we filtered out the list by selecting the ones that have increased significantly on a YTD basis and which have higher upside potential, as of November 10. Finally, the stocks were ranked in ascending order of their average upside potential.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Merus N.V. (NASDAQ:MRUS)
% Increase on a YTD Basis: ~90.4%
Average Upside Potential: ~61.4%
Merus N.V. (NASDAQ:MRUS) is a clinical-stage immuno-oncology company, which is engaged in the development of antibody therapeutics. The company is headquartered in Utrecht, the Netherlands.
Merus N.V. (NASDAQ:MRUS)’s platform technology enables the creation of full-length human bispecific antibodies, possessing the potential to aim multiple cancer pathways simultaneously. Zenocutuzumab, the company’s lead candidate, demonstrated promising results in pre-clinical studies. Recent data by Merus N.V. (NASDAQ:MRUS) reflected significant inhibition of tumor growth in high NRG1-expressing patient-derived xenografts throughout various tumor types. Wall Street analysts are optimistic about the potential for zenocutuzumab in the treatment of brain, ovarian, esophageal, gallbladder, and liver cancers.
Furthermore, the MCLA-129 data in NSCLC patients was well-received, reflecting the versatility of Merus N.V. (NASDAQ:MRUS)’s approach in aiming for different cancer types. The oncology market provides a strong opportunity for the company. Given the favorable outlook for the global cancer therapeutics market, innovative approaches like bispecific antibodies appear to be well-positioned to capture market share.
Merus N.V. (NASDAQ:MRUS)’s focus on difficult-to-treat cancers and combination therapies should offer a competitive edge. The combination therapies, like pairing petosemtamab with pembrolizumab, align with the present trend in oncology towards multi-targeted approaches.
Guggenheim upped its price objective on the shares of Merus N.V. (NASDAQ:MRUS) from $93.00 to $111.00, giving a “Buy” rating on 1st October.
TimesSquare Capital Management, an equity investment management company, released its second-quarter 2024 investor letter. Here is what the fund said:
“Our preferences among Health Care stocks are those companies providing novel therapies for unmet needs that deserve premium pricing, or specialized service providers. A new addition this quarter is Merus N.V. (NASDAQ:MRUS), a clinical-stage immune-oncology biotechnology company. Their pipeline consists of several programs targeting solid tumors with various bispecific antibodies.”
Overall, MRUS ranks 3rd on our list of top performing European stocks heading into 2025. While we acknowledge the potential of MRUS as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued AI stock that is more promising than MRUS but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
Disclosure: None. This article is originally published at Insider Monkey.
