Fears of a recession are overdone and 2019 should only see a slowdown in earnings-per-share growth, according to Citigroup Inc., advising investors to buy the dip in equities.

Strategists including Robert Buckland and Jonathan Stubbs forecast returns in global equities of 14 percent for the next 12 months, as their “bear-market checklist” shows just 3.5 red flags out of a possible 18.

“Equity valuations aren’t stretched, fund inflows have been miserly and corporate behavior subdued,” wrote Buckland, adding that “a flat yield curve and rising credit spreads are worrying, but traditional signs of bull market euphoria remain notably absent.”

Citi expects global companies’ EPS to grow an average 4 percent in 2019. While that estimate is below the consensus of 7 percent, it’s better than the 4 percent contraction being priced into markets now, Buckland said.

In Europe, the strategists downgraded U.K. stocks to neutral as Brexit uncertainty weighs on confidence, though they don’t expect a “no deal” outcome and note a lot of the bad news is already discounted.

With Europe heavily exposed to a slowdown in global trade, it’s possible EPS could contract this year, according to Stubbs. The European head strategist sees EPS downgrades remaining a drag, but said he expects a “re-rating later in the year as global recession fears abate.” Citi estimates the Stoxx Europe 600 Index will reach the 400 level by year-end, offering an upside of around 18 percent from now.

Forecasting the dollar to weaken this year, the strategists upgraded emerging-market equities to overweight, making them their preferred value trade. They also kept an overweight rating on U.S. stocks, with the slowdown in EPS already priced-in, while staying underweight Australia and Japan.

Citi recommended a balanced approach to sector exposure, with a mix of cyclical and defensive equities. The bank now has an overweight rating on communication services and health care in the defensive space, and picked industrials as the preferred cyclical sector. Energy, financials, materials and information technology are rated neutral, while consumer staples, utilities and consumer discretionary remain underweight.

This article was provided by Bloomberg News.