Strategists at Deutsche Bank AG predict that European stocks could experience significant gains in 2025, driven by improving economic conditions and a favorable outlook for corporate earnings.

After underperforming U.S. equities last year, European markets now appear poised for a potential rally, according to a team led by Maximilian Uhle. In a note published on Tuesday, Deutsche Bank strategists projected that the Stoxx 600 index could climb to 590 points by the end of the year.

This target, the most optimistic among analysts, suggests a potential 15% increase from current levels. "Economic surprises continue to trend positively, political uncertainty is easing, and possible stimulus measures from China add upside risk," Uhle wrote. He also highlighted factors such as the formation of a new German government and low earnings expectations for the fourth quarter as reasons for anticipating strong performance.

The Stoxx 600 index has struggled to rebound from its record high in September amid concerns over political risks in Europe, sluggish growth in China, and fears of new U.S. tariffs following Donald Trump's return to the White House.