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Investing.com -- European media stocks came into 2026 after a bruising year, with the sector emerging as the weakest performer in the Stoxx Europe 600 in 2025.

The damage was driven mainly by valuation derating rather than earnings downgrades, leaving fundamentals broadly intact while pushing the sector to one of its widest relative discounts in a decade, Kepler Cheuvreux analyst Conor O’Shea said in a Friday note. 

O’Shea says perceived vulnerability to generative AI was the dominant driver behind the sell-off. He argues that investors have focused too narrowly on fears of disruption, even though earnings expectations have not been materially cut.

"As a result, the media sector has the second-largest discount between current forward P/E multiples and the ten-year median, exceeded only by the food sector," O’Shea wrote. 

In this regard, O’Shea reshuffled ratings and preference lists across the sector. Notably, Pearson and ProSiebenSat1 were upgraded from Reduce to Hold after share price underperformance brought valuations back in line with target prices.

The analyst also raised target prices for Canal+, Havas, ITV, Publicis, and RTL Group, reflecting what they see as a better balance between risk and reward following last year’s derating.

Moreover, RELX was added to the Most Preferred list. O’Shea argues the stock is “more a beneficiary of GenAI than vulnerable, despite the recent de-rating.” MTG Group also entered the Most Preferred list, described as “cheap and low-risk,” replacing JCDecaux and Springer Nature.

On the downside, Pearson and UMG exited the Least Preferred list, while M6 and Ubisoft were added. M6 "is wholly exposed to a weakening French TV advertising market, has made a huge commitment to buy FIFA World Cup rights, and trades at a premium to peer TF1," O’Shea noted. 

Looking ahead, Kepler expects 2026 phasing to be broadly supportive for the sector, helped by a mini-quadrennial year with ad-rich events such as the FIFA World Cup, U.S. mid-term elections, and the Winter Olympics in Cortina. 

However, O’Shea warns that pricing pressure in linear TV advertising, particularly in France and the U.K., could offset some of that cyclical support, reinforcing their preference for companies with visible market share gains and more resilient business models, such as Publicis. 

Investing.com -- European media companies with strong digital strategies and AI integration are leading the sector, according to recent JPMorgan analysis.

In a recent note to clients, the Wall Street bank highlighted 4 names that are leveraging technological innovation to drive sustainable growth and represent its key picks for 2026.

JPMorgan’s research points to companies that are not merely surviving digital disruption but thriving through it, with particular emphasis on those positioned to benefit from AI advancements and subscription-based models.

UMG (Universal Music Group)

JPMorgan has upgraded UMG’s subscription growth projections from 10% to 13% by 2026, citing the company’s strong position in the music industry.

With 8-9 million copyrights generating consistent listening and cashflows, UMG offers the best platform for artists and labels to succeed across all formats and regions.

The bank notes that "Streaming 2.0" benefits from wholesale+ pricing and tiering will drive growth, with expected margin expansion of approximately 120 basis points next year.

JPMorgan has increased its price target from €39 to €42, suggesting nearly 100% upside potential. The bank views AI as an opportunity rather than a threat for UMG, particularly through "AI-derivatives" that could expand the market.

Universal Music Group reported a 4.5% increase in revenue for the second quarter of 2025, driven by strong growth in subscription streaming.

RELX

JPMorgan sees RELX as uniquely positioned to leverage generative AI by combining technology with authoritative information and domain expertise.

The bank expects AI to enhance RELX’s value proposition, particularly in its Scientific, Technical & Medical (STM) division, which represents 31% of profits. Legal growth has already accelerated from 6% to 9%, with projections of 10% growth next year.

The upcoming LeapSpace platform, set to launch in early 2026, is expected to streamline the research process and increase researcher productivity. JPMorgan forecasts STM organic growth to accelerate from 5% to 6% in 2026 and reach 8% by 2032. The bank’s price target of 5070p implies 70% upside.

In recent news, RELX PLC reported 7% underlying revenue growth for the first nine months of the year and reaffirmed its full-year outlook.

Publicis

With a price target of €130, JPMorgan sees Publicis continuing its six-year trend of outperforming peers. Since 2019, Publicis has achieved organic growth of 5.1% annually versus 1.7% for competitors.

The bank expects approximately 5.5% growth in 2025 compared to -1.0% for peers. Publicis’s success stems from its better business mix, differentiated data capabilities through Epsilon, and strength in retail media and AI.

JPMorgan notes that Publicis trades at just 10.4x 2026 PE while offering approximately 8% earnings growth and a 4% dividend yield. The bank’s price target implies 50% upside.

Publicis was recently added to Kepler’s French Top Picks list, a move that followed the company’s third guidance upgrade.

Pearson

JPMorgan expects Pearson to deliver over 5% organic growth next year, building on projected 8% organic growth in Q4 this year. The company offers high-quality, contract-based revenues and strong institutional adoption.

The bank views AI as a tailwind for Pearson, reinforcing the need for trusted, accredited content and driving demand for integrated digital and assessment solutions.

Trading at 13x 2026 earnings with medium-term operating profit growth of 7-8% and earnings growth of 12-13%, JPMorgan has upgraded its price target to 1440p.

Pearson PLC announced 4% sales growth in the third quarter of 2025, with strong performance noted in its Virtual Learning and Assessment divisions.

JPMorgan’s analysis suggests that European media companies embracing digital transformation and effectively integrating AI into their business models are best positioned for sustainable growth in the evolving media landscape.

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