JPMorgan has turned more constructive on European utilities, highlighting SSE PLC (LSE:SSE) and Centrica PLC (LSE:CNA) among its preferred names as higher commodity prices and geopolitical tensions boost the sector’s defensive appeal.
The bank said the conflict in Iran has shifted the outlook for gas and power markets, with prices now expected to remain structurally higher in both the short and medium term. European gas benchmarks for 2028 are around 28% above pre-war levels, easing earlier concerns about oversupply.
That shift is driving what JPMorgan describes as a “halo effect” for utilities, as investors rotate into defensive sectors offering more predictable earnings amid stagflation risks and ongoing global uncertainty.
Analysts at the US bank said they continue to favour companies with a mix of growth and valuation support, naming SSE and Germany’s RWE, while also upgrading France's Engie and highlighting British Gas owner Centrica as a lower-multiple stock with scope for earnings upside.
By contrast, it cautioned against names such as Finland's Fortum, where valuations already reflect more optimistic long-term assumptions.
The analysts added that utilities are also relatively insulated from disruption linked to artificial intelligence, reinforcing their appeal as a stable long-term investment theme.