MS says low valuations make European travel and leisure attractive going into 2026

Compass

07/01/2026 09:12

** Morgan Stanley says the European travel and leisure industry looks attractive compared to the broader market, after weakness across sub-sectors caused the stocks to underperform against other European equities last year

** The industry is a "classic stock-picker's market", MS says, naming Compass CPG.L, Flutter FLTRF.L, Entain ENT.L and Accor ACCP.PA as its top picks, all rated "overweight"

** It sees an +18% market cap weighted sector upside driven by the first two groups

** The broker downgrades French food services firm Sodexo EXHO.PA to "underweight" from "equal-weight", saying it lacks catalysts despite a cheap valuation

** "We see ongoing risk to forecasts and think the turnaround will take longer than expected," MS says

** Sodexo joins "underweight"-rated Scandic SHOTE.ST and Playtech PTEC.L among the broker's least preferred stocks

(Reporting by Dimitri Rhodes in Gdansk)

((Dimitri.Rhodes@thomsonreuters.com))