10 Undervalued European Stocks | Morningstar UK

Discounted stocks still exist on European markets, despite 2025 being a strong year. While the Morningstar Developed Markets Europe Index rose 16.27%, sector performance was uneven. Some sectors, such as healthcare, underperformed the market. It’s no surprise, then, that four of the 10 quality stocks most undervalued by the market are in the healthcare sector.

The 10 stocks listed below were selected from the sample of European stocks covered by Morningstar analysts and valued with an Economic moat of “wide” or “narrow”. From these, we selected the top 10 with the highest discount rate compared to the estimated fair value.

GN Store Nord GN

GN Store Nord stock lost 20% over the past year and is now trading at a 55% discount to its fair value of DKK 255.00.

“GN Store Nord consists of two businesses: hearing aids and gaming audio products. While the combination of hearing aids and consumer and professional audio solutions appears to lack synergies, we believe it offers GN Group the opportunity to leverage its research and development efforts and enter the non-medical hearing aid market. Within their respective niches, both audio and hearing businesses are benefiting from favorable trends. An aging population, relatively low penetration rates in developed countries, and virtually untapped market share in emerging markets are the main drivers for the hearing aid segment. Competitive gaming is also growing, stimulating consumer investment in equipment.

“GN Hearing benefits from two main sources of competitive advantage: intangible assets, represented by investments in technology and a strong brand, and switching costs borne by its customers. The reputation of innovator has allowed the company to maintain strong relationships with clients,” says Max Jousma, equity analyst at Morningstar.

Tate & Lyle TATE

Tate & Lyle shares fallen 42% in 2025 and are now trading at a 50% discount to their fair value of GBX 725.00.

“Tate & Lyle offers alternative ingredients to food and beverage companies looking to eliminate harmful components such as sugar, fat, and salt, improve nutritional credentials through the addition of fiber, and extend the shelf life of their products. We assign to Tate & Lyle a Narrow economic moat because we believe its portfolio optimization efforts in recent years have improved its pricing power and competitive position within the industry,” says Diana Radu, equity analyst at Morningstar.

Edenred Group EDEN

Edenred shares have fallen 36% in 2025 and are now trading at a 49% discount to their fair value of EUR 37.00.

“Edenred’s core services are food vouchers and fuel cards, but it also offers services such as wellness benefits and electric vehicle charging stations. These markets are highly concentrated, with Pluxee as the only real global competitor. Edenred generates 70% of its revenue in countries where it is a leader and can leverage its strong network of dealers and customers to offer the best deals to both. The shift to digital has disrupted Edenred’s ecosystem, which is why we have cut our revenue growth and profit margin estimates. However, we are convinced that Edenred’s size allows it to outperform its competitors, dedicating 90% of its investments to its product and technology.

“The superior network gives it an advantage in seeking new customers. Edenred’s markets also offer significant growth potential. Opportunities are greatest among SMEs, with penetration of 20%, 10%, and 5% in Brazil, France, and Italy, respectively,” says Ben Slupecki, equity analyst at Morningstar.

Nexi lost 16.59% in 2025 and its shares are now 47% off their fair value of EUR 7.90.

“Nexi offers its customers merchant acquiring, card issuing, and digital banking services. Through the integration and divestiture of several payment businesses, Nexi has created a compelling offering, supported by sustainable and structural growth drivers. With its two latest major acquisitions, Nets and SIA, Nexi has also gained a broader European presence and stronger processing capabilities. The company has transitioned from a pure-play Italian provider to a fully vertically integrated European payment services provider, ranking among the top European players. Nexi still generates the majority of its revenue in Italy, where it holds a strong competitive position and is deeply integrated into the bank-dominated payment infrastructure.

“Outside Italy, Nexi has exposure to the Nordic countries, which boast some of the highest card usage rates in Europe, as well as emerging regions such as Germany and Eastern and Southern European countries, which offer solid organic growth opportunities. Nexi is also benefiting from a gradual shift from national debit networks to international debit and credit networks supported by Visa and Mastercard. Nexi not only achieves higher margins on international card networks, but also offers a better offering to support merchants and banks in their transition to these networks. Furthermore, international card networks are increasingly using new payment technologies, increasing demand for more advanced POS terminals, thus increasing subscription revenue for Nexi and generating further upgrade sales cycles,” says Niklas Kammer, equity analyst at Morningstar.

Despite Elekta’s gain of 2.22% over 2025, it remains significantly undervalued by the market with a price/fair value ratio of 0.53.

“Demand for radiotherapy is expected to remain high over the next decade. Elekta will benefit from this, but its success will depend on the continued adoption of Unity, the success of its revamped product and software offering, and its ability to withstand competition from Siemens Healthineers. Our forecasts indicate that nearly 95% of global radiotherapy equipment installations will be provided by these two companies over the next decade. Much of our thesis on Elekta is based on its Unity platform, which has the potential to significantly improve the efficacy of radiotherapy. So far, with limited data, Unity is delivering on its promises, and the company continues to expand its market presence,” says Alex Morozov, regional director at Morningstar.

Croda International CRDA

Over the course of 2025, Croda International saw its shares decline 21% in market value, and they now trade at a 47% discount to their fair value of GBX 5200.00.

“Croda International is a British specialty chemicals company focused on the consumer, crop protection, and healthcare end markets. Croda targets fast-growing niches in these sectors, aiming to consolidate its presence by acquiring early-stage technology and life sciences companies and establishing itself in its customers’ supply chains through its high-touch direct sales model and strong focus on innovation. We assign the company a narrow economic moat rating, due to the high switching costs borne by its customers, given the high level of customization of Croda’s products, and the intangible assets resulting from ongoing investments in research and development,” says Diana Radu, equity analyst at Morningstar.

DSM-Firmenich DSFIR

DSM-Firmenich shares have fallen 27% over the past year and are now trading at a price/fair value ratio of 0.57.

“DSM-Firmenich is one of the largest consumer chemicals companies in the world. The majority of its revenue comes from segments that benefit from leading market positions in increasingly established sectors, such as flavors and fragrances, and the broader food ingredients market. This has provided the company with a large profit margin, derived from intangible assets and the bargaining power it can exert over its customers. Two of the company’s most valuable segments are Perfumery & Beauty, and Taste, Texture & Health, which together accounted for 56% of revenue in 2024.

“In Perfumery & Beauty, the company can leverage the fragrance expertise and broad range of ingredients developed by Firmenich over decades to create perfumes and scented items for everyday use. Taste, texture, and health is the segment expected to benefit most from the synergies resulting from the merger between DSM and Firmenich, creating value-added products by combining DSM’s strengths in enzymes and cultures, dietary supplements, and biotechnology with Firmenich’s superior capabilities in flavors and taste modulation. This should enable the company to develop proprietary solutions and increasingly complex innovations to meet consumer demand for healthier, more nutritious, and natural products. DSM-Firmenich’s medium-term strategic objectives include sales growth of 5%-7% and an EBITDA margin of 22%-23%,” says Diana Radu, equity analyst at Morningstar.

Coloplast shares fallen 27% over the past year and are now traded over 40% below their fair value of DKK 962.00.

“Headquartered in Denmark, Coloplast is a global leader in ostomy and incontinence care. The company has a long history of consistent and significant innovation in ostomy and incontinence care, which has allowed it to achieve a dominant position in Europe and grow in the United States. Since 2008, the company has successfully reduced its cost structure while focusing on profitable growth. After moving most of its production to Hungary, China, and Costa Rica, Coloplast now boasts a gross margin more than 1,150 basis points higher than that of rival Convatec. Coloplast is currently shifting its strategy to drive growth by entering new geographies, with a particular focus on the United States.

“We have long recognized Coloplast’s competitive advantage and recently upgraded our moat rating from ‘narrow’ to ‘broad’ due to the company’s proven strength of returns and its consistent ability to generate a return on equity well above its cost of capital. Having studied Coloplast for over a decade, we believe it can maintain its competitive advantages and generate economic returns for the next 20 years,” says Debbie S. Wang, senior analyst at Morningstar.

Pandora was down 44.84% in 2025 and the stock is now trading at a 40% discount to fair value of DKK 1,150.00.

“Pandora is a global jewelry brand and a leader in the charm bracelet category. We believe the company benefits from global brand awareness and broad distribution channels, as well as moderately high pricing power, driven by the low perceived value of charms and repeat purchases and customer loyalty. We believe these advantages will persist over the next 10 years, generating economic profits and providing Pandora with an economic advantage based on the brand’s intangible assets.

“We believe Pandora’s pricing power, demonstrated by a gross margin of nearly 80%, should persist thanks to its high share of gifting, which represents over 60% of sales, which is less price-sensitive. Furthermore, we are now more confident in the longevity of the appeal of charm bracelets, Pandora’s core product category, given its long history (they have contributed 70%-80% of Pandora’s revenue since its IPO in 2009) and the solid recovery over the past three years following successful marketing initiatives and product launches,” says Jelena Sokolova, senior analyst at Morningstar.

Fresenius Medical Care FME

Fresenius Medical Care lost 4.44% last year and is now 40% below its fair value of EUR 67.00.

“Fresenius Medical Care treats patients with end-stage renal disease, or ESRD, primarily through its network of dialysis centers and related medical technology. Its strengths in these related areas help Fresenius maintain its position as a global leader in this market.

“The company’s position as the world’s leading dialysis service provider and equipment manufacturer remains symbiotic and unique. Fresenius’ experience operating nearly 3,700 dialysis clinics worldwide—a share greater than that of its closest competitor DaVita thanks to Fresenius’s more extensive global network—enables it to understand the needs of caregivers and patients to guide its service offerings and product innovation. Fresenius is using clinical insights to develop and ultimately produce even better technologies for the treatment of ESRD patients. Despite the threat of obesity drug expansion in the long term, we expect the company to benefit from moderate demand in developed markets, such as the United States, and even faster expansion in emerging markets over the long term,” says Julie Utterback, senior equity analyst at Morningstar.