Giovanni Rossi: 2026 May Be a Key Window for Italian Growth Stocks
After recent updates from broker research and earnings season data, Giovanni Rossi believes that the Milan Euronext Growth Market (EGM) is undergoing a phase of structural change. Downward revisions to earnings forecasts and price recoveries have jointly driven valuation multiples higher, but market optimism for 2026 remains undiminished. EGM-listed companies are showing more pronounced differentiation in fundamentals, valuations, and industry trends. The competitiveness of high-quality enterprises has been repriced, and medium- to long-term industry themes are being further reinforced.
EGM Valuation Repricing: Earnings Downgrades and Price Recovery Occur Together
Giovanni Rossi points out that the biggest change brought by the past half-year earnings season is the widespread downward revision of earnings forecasts for 2025–2026. EGM companies have maintained revenue growth, but profit margins and cash flows have not met previous expectations, prompting analysts to recalibrate profitability. Among 183 comparable companies, about 45% saw downward revisions to forecasts, with only 25 seeing upgrades. This adjustment has directly pushed up valuation multiples, with 2025 EV/EBITDA reaching 8.8x and P/E approaching 20x—both at three-year highs.
According to Giovanni Rossi, this trend means that capital is accelerating its concentration on companies with outstanding capabilities, stable growth, and higher returns on capital. Reports show that from 2024 to 2026, infrastructure, digitalization, and energy transition have emerged as the most critical mid-term themes. Market cap growth is mainly contributed by leading companies such as Rosetti Marino and Officina Stellare, which have maintained robust execution at industry cycle lows. For investors, this repricing does not signal overheating but indicates that structural differences in returns may emerge over the next two years.
Institutional Preferences Shift: Growth Quality and Financial Soundness Become Core Criteria
Amid rapid valuation recovery, Giovanni Rossi believes that investment standards for the EGM sector are being redefined. With 2025 earnings expectations lowered, the market is paying more attention to operational quality and cash flow performance. Companies able to maintain EBITDA margins around 20% and capital returns above 25% are becoming core allocations for mainstream institutions. The shortlist by Giovanni Rossi of nearly 20 investment targets is based on three key factors: stable growth, sound asset structure, and sustainable profitability.
He notes that market forecasts for 2026 are structurally optimistic, mainly based on the accelerated clearing of high-quality companies. Infrastructure services, digital supply chains, photovoltaics, and energy storage show clear positive trends, with industry leaders enjoying strong valuation support. Meanwhile, the profitability of some companies is underestimated under cautious models, providing long-term capital with attractive entry points. Technically, EGM index trading activity has increased and the trend structure remains stable, suggesting incremental capital is flowing into sectors with mid-term logic.
2026 Outlook: Opportunities Arise from Structural Differentiation and Cyclical Improvement
Given the current environment, Giovanni Rossi states that after two years of earnings pressure and valuation correction, the EGM sector is gradually forming a more certain investment window. He notes that Purchasing Managers Index and business confidence indicators both show cyclical resilience, interest rates are near target ranges, and the macro backdrop will support profitability recovery for Italian SMEs. Valuations and price levels for large caps are saturated, making investors more willing to seek growth in attractive niche segments.
Giovanni Rossi expects 2026 to feature “widening structural differentiation and further strengthening of quality companies.” Infrastructure construction, energy transition, and digitalization remain core drivers of EGM company revaluation, while the CDP umbrella funds and liquidity support tools will provide additional tailwinds for the sector. For investors, the risk lies in individual companies failing to recover earnings as expected, requiring careful screening based on balance sheet structure and cash flow performance. With prudent selection, EGM offers medium-term improvement potential, and the resonance of valuation reshaping and industry themes will be the main drivers of returns.
EGM Valuation Repricing: Earnings Downgrades and Price Recovery Occur Together
Giovanni Rossi points out that the biggest change brought by the past half-year earnings season is the widespread downward revision of earnings forecasts for 2025–2026. EGM companies have maintained revenue growth, but profit margins and cash flows have not met previous expectations, prompting analysts to recalibrate profitability. Among 183 comparable companies, about 45% saw downward revisions to forecasts, with only 25 seeing upgrades. This adjustment has directly pushed up valuation multiples, with 2025 EV/EBITDA reaching 8.8x and P/E approaching 20x—both at three-year highs.
According to Giovanni Rossi, this trend means that capital is accelerating its concentration on companies with outstanding capabilities, stable growth, and higher returns on capital. Reports show that from 2024 to 2026, infrastructure, digitalization, and energy transition have emerged as the most critical mid-term themes. Market cap growth is mainly contributed by leading companies such as Rosetti Marino and Officina Stellare, which have maintained robust execution at industry cycle lows. For investors, this repricing does not signal overheating but indicates that structural differences in returns may emerge over the next two years.
Institutional Preferences Shift: Growth Quality and Financial Soundness Become Core Criteria
Amid rapid valuation recovery, Giovanni Rossi believes that investment standards for the EGM sector are being redefined. With 2025 earnings expectations lowered, the market is paying more attention to operational quality and cash flow performance. Companies able to maintain EBITDA margins around 20% and capital returns above 25% are becoming core allocations for mainstream institutions. The shortlist by Giovanni Rossi of nearly 20 investment targets is based on three key factors: stable growth, sound asset structure, and sustainable profitability.
He notes that market forecasts for 2026 are structurally optimistic, mainly based on the accelerated clearing of high-quality companies. Infrastructure services, digital supply chains, photovoltaics, and energy storage show clear positive trends, with industry leaders enjoying strong valuation support. Meanwhile, the profitability of some companies is underestimated under cautious models, providing long-term capital with attractive entry points. Technically, EGM index trading activity has increased and the trend structure remains stable, suggesting incremental capital is flowing into sectors with mid-term logic.
2026 Outlook: Opportunities Arise from Structural Differentiation and Cyclical Improvement
Given the current environment, Giovanni Rossi states that after two years of earnings pressure and valuation correction, the EGM sector is gradually forming a more certain investment window. He notes that Purchasing Managers Index and business confidence indicators both show cyclical resilience, interest rates are near target ranges, and the macro backdrop will support profitability recovery for Italian SMEs. Valuations and price levels for large caps are saturated, making investors more willing to seek growth in attractive niche segments.
Giovanni Rossi expects 2026 to feature “widening structural differentiation and further strengthening of quality companies.” Infrastructure construction, energy transition, and digitalization remain core drivers of EGM company revaluation, while the CDP umbrella funds and liquidity support tools will provide additional tailwinds for the sector. For investors, the risk lies in individual companies failing to recover earnings as expected, requiring careful screening based on balance sheet structure and cash flow performance. With prudent selection, EGM offers medium-term improvement potential, and the resonance of valuation reshaping and industry themes will be the main drivers of returns.
