Big European companies have reported fat profits over the past two weeks. However, according to Bank of America strategists, analysts have downgraded their earnings estimates for companies more than they have raised them. The investment bank said the earnings per share (EPS) revision ratio for European companies fell to 0.85 in April from 1.12 in March. While companies report strong profits, analysts tend to downgrade stocks if those earnings are unlikely to grow in the future. For example, oil giant Shell last week reported a better-than-expected first-quarter profit of $9.6 billion for the first three months of the year. However, if oil prices continue to fall as they have over the past year, future earnings could be at risk of falling from current levels. Companies with exposure to emerging markets posted the largest revisions in April, according to strategists. On the other hand, those with exposure to the U.S. and Europe fell even more. Bank of America’s analysis is in line with Morgan Stanley’s earlier forecast. The Wall Street giant said in April that economic growth in Asia will outpace that of the United States and Europe this year due to strong domestic demand in countries in the region. The table below highlights 10 large-cap European stocks with high EPS revisions, according to BofA. The ratio is calculated by taking the difference between the number of positive and negative changes in earnings per share over the past month. This difference is divided by the total number of estimates made during the same time period. Luxury giants Hermes, Burberry, and LVMH top the Bank of America list. The parent company of Louis Vuitton, Moët & Chandon and Hennessy said in April it would benefit from China’s Covid reopening as the return of travel brings back high-end consumers. LVMH shares hit an all-time high after the earnings announcement and are up nearly 30% this year. Novo Nordisk’s EPS revision ratio is also in positive territory, thanks to its blockbuster diet drug Wegovy and other drugs in its pipeline. Historically, luxury and pharmaceutical stocks have outperformed during periods of high inflation, as these companies have been able to raise prices more than others. More broadly, BofA said European-focused equity funds have been struggling recently. Until last week, they recorded seven straight weeks of outflows – the highest level since mid-December. Portfolios managed by fund managers (active funds) lost $1.79 billion, while funds tracking indexes (passive funds) lost $1.19 billion — the first such losses this year, according to Bank of America data, the investment bank added. .