STOCKS NEWS EUROPE-DB sees 60 pct of European cos beating on Q4 sales

Despite a weak start to the fourth quarter reporting season, Deutsche Bank (Xetra: DBK.DE - news) expects 60 percent of companies in the STOXX Europe 600 to beat analyst expectations for quarterly revenues, paving the way for a rebound in earnings this year.

That would be above the long-term average of 57 percent, with Deutsche counting on better-than-expected economic data, slower analyst downgrades and companies' ability to defend their profitability when sales do fall.

"We expect self-help to compensate for a meaningful portion of disappointment on the sales level and estimate the earnings beat ratio at 60 percent... close to the historic threshold of 64 percent necessary to keep estimate revisions stable in the subsequent 3-month period," Deutsch's analysts write in a note.

"With earnings 30 percent below trend in Europe, and operational leverage higher, we think earnings (can) potentially rebound strongly in 2014, particularly as the euro area recovery sustains itself."

In this context, they recommend companies where sales are highly correlated to regional investment growth as well cyclical companies with domestic exposure.

Among companies due to report in the next week, Deutsche Bank favors Dutch consumer electronics firm Philips (Amsterdam: PHIA.AS - news) , SKI, the world's biggest bearings maker, and German industrial conglomerate Siemens, which it sees as self-help stories with supportive valuation and a cyclical bias.

Reuters messaging rm://francesco.canepa.thomsonreuters.com@reuters.net