Goldman Sachs resumes coverage on European Internet & Media, sees 22% upside

Investing.com -- Goldman Sachs has resumed coverage on 24 European Internet and Media stocks, estimating an average upside of 22% across the sector.

The Wall Street giant sees execution on growth and margin delivery as a key differentiator as companies navigate structural change, macro uncertainty, and rising competition.

The bank expects top-line growth of 8% in 2025, with 91 basis points of average margin expansion fueling 11% earnings per share (EPS) growth.

The new coverage is shaped by five core themes: secular migration to digital and workflow automation; the potential of Generative AI; margin improvement through efficiencies; capital allocation flexibility; and a rising wave of industry consolidation.

While parts of the sector—such as classifieds, food delivery, e-commerce, and streaming—are maturing, Goldman stresses that “execution on delivering growth and margins becomes even more important” in this new phase.

Generative AI remains an important theme, but the report notes that market preference has shifted toward companies offering tangible near-term benefits.

“We believe that the market will reward those companies that can provide greater visibility into the benefits of Generative AI adoption through improved top-line growth or cost savings,” Goldman wrote.

This puts scale players with proprietary data and infrastructure at an advantage, including Relx (LON:REL), Wolters Kluwer (AS:WLSNc), Prosus (AS:PRX), Publicis (EPA:PUBP), Informa (LON:INF), and Pearson (LON:PSON).

Goldman rates 12 stocks as Buy, including Relx, Rightmove (LON:RMV), Prosus, Springer Nature (ETR:SPGG), and Publicis. Another eight stocks are rated Neutral, while four are rated Sell.

The Sell-rated stocks include Auto Trader Group (LON:AUTOA), Allegro (WA:ALEP), Schibsted (OL:SCHA) and ProSieben (ETR:PSMGn).

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According to Goldman, mergers and acquisitions (M&A) are also expected to play a larger role within the sector, as companies leverage strong balance sheets to pursue bolt-on acquisitions or share buybacks.

The bank notes that sector leverage has dropped to historical lows, with several names—such as Prosus (OTC:PROSF), Deliveroo (LON:ROO), Auto1 (F:AG1G), and Rightmove—holding net cash positions.

Goldman Sachs sees compelling opportunities among “quality names and semi-cyclicals with improving fundamentals,” particularly in names like Informa, Wolters Kluwer (AS:WLSNc), Springer Nature, and Publicis.

At the same time, it views recent strength in some stocks, such as ProSieben, as disconnected from fundamentals, while competitive concerns for Delivery Hero (ETR:DHER) and Inpost (AS:INPST) are considered “overdone.”

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