2Q26 Previews: Stabilisation. Still waiting on Recovery.

Research evidence excerpt

2Q26 Previews: Stabilisation. Still waiting on Recovery.

Idea

July 6, 2026 03:45 PM GMT

Morgan Stanley & Co. International plc+MBuilding & Construction | Europe Cedar Ekblom, CFA

Equity Analyst

2Q26 Previews: Stabilisation. Cedar.Ekblom@morganstanley.comDaniel Khajenouri +44 20 7425-4623

Daniel.Khajenouri@morganstanley.com +44 20 7425-3065

Still waiting on Recovery. Nicolas J Mora

Nicolas.Mora@morganstanley.com +44 20 7677-5376

Q2 should confirm Europe volumes have stabilised but won't Peter Ajose-Adeogun

signal a convincing recovery. Some soft data (PMIs. confidence) EquityPeter.Ajose-Adeogun@morganstanley.comAnalyst +44 20 7677-1618

show stagnating momentum. Own 2027 revision asymmetry in Oscar P Smyth

HEI/ROCK/SGO/KSP/BEAN/BREE; avoid weak HVAC and ResearchOscar.Smyth@morganstanley.comAssociate +44 20 7425-6567

expensive defensives in NIBE/ARI/GEB/WIE.

Building & Construction

Europe

Key Takeaways Industry View In-Line

Europe PMIs consistently below 50; UK weakened and EU construction

confidence deteriorated again in June.

Pricing is the main earnings support. Input-price PMIs elevated, companies

reiterate value over volume. Realised pricing may catch up into 2H as contracts

reset

Q2 beat risk is very selective. We see the cleanest upside at KSP, HOLN, BZU,

SIKA. HVAC remains the main downside risk with NIBE / ARI.

2027 positioning matters more than Q2. Own revision/risk-reward asymmetry in

HEI, ROCK, SGO, KSP, BEAN, BREE. Avoid NIBE, ARI, GEB, WIE.

Valuation dispersion is high. EU heavyside has rerated but remains cheap versus

US. Sika/Geberit/Nibe screen as the key valuation outliers.

Exhibit 1: On earnings, Sika, Buzzi and Holcim screen as the standout beats,

with upside across heavyside. We expect relatively weaker performance from

HVAC names Nibe and Ariston.