Investing.com — European energy stocks have diverged sharply since the Iran conflict erupted in late February, with investors rewarding companies seen as direct beneficiaries of stronger oil and gas prices, while leaving several large-cap names trading below what Jefferies believes their fundamentals warrant.
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The brokerage said the sector’s performance has created a growing divide between stocks whose gains are justified by improving earnings prospects and those that appear oversold despite limited operational exposure to the conflict.
Among integrated oil companies, Neste Oyj () has been the standout performer, rallying 33% since the conflict began as stronger diesel prices and supportive renewable fuel regulations boosted earnings expectations. Repsol () has gained 17%, with Jefferies citing the prospect of an upgraded share buyback and improving opportunities in Venezuela, while Equinor ASA () has climbed 13% on the back of firmer European gas prices and a clearer strategic outlook.
In contrast, the brokerage argued that several heavyweight energy names have lagged despite resilient fundamentals.
Jefferies identified Shell PLC () as one of its preferred “oversold” opportunities, noting the company’s acquisition of ARC Resources assets extends reserve life and strengthens the investment case for a final investment decision on its Canada LNG project. TotalEnergies SE () was also described as oversold, with the bank saying its diversified portfolio has helped offset Middle East risks, while Ithaca Energy PLC () offers greater flexibility to pursue acquisitions.
Within the exploration and production space, Vår Energi has risen 15%, supported by expectations for extraordinary dividends and long-term production growth, while has gained 11% after completing refinancing and extending debt maturities. However, Jefferies said stocks including , and now look oversold despite improving balance sheets, stronger liquidity and progress on strategic projects.
The brokerage also highlighted opportunities among oilfield service companies, where , , and have underperformed despite limited direct disruption from the Middle East conflict and healthy order pipelines. It argued these companies could benefit if regional reconstruction spending accelerates once geopolitical tensions ease.
Jefferies said the broad dispersion in share-price performance reflects investor debate over which companies deserve to trade at a geopolitical premium and which have been unfairly left behind, creating selective buying opportunities across the European energy sector.