European small cap stocks have “bottomed out (or at the very least stabilised) relative to large caps,” says Aleksander Peterc – a Bernstein analyst.Small caps have underperformed over the past two years but Peterc is convinced that they’ll recover sharply in 2025.The Bernstein analyst is particularly bullish on three names: Duerr AG, Ipsos SA, and Soitec SA.Each of these three names, he believes, could return well over 50% over the next twelve months.Let’s see what Duerr, Ipsos, and Soitec have in store for potential investors. Duerr AG (DUE)Duerr stock has been a disappointment for shareholders this year but its promising growth outlook makes it a great pick for 2025, as per Aleksander Peterc.He expects the material and plant engineering company to benefit from a continued shift to electric vehicles.Other industry trends that could help Duerr share price recover over the next twelve months include increasing global interest in sustainable construction materials, the analyst added.Additionally, shares of the company based out of Stuttgart, Germany are currently trading at an attractive valuation as well.Bernstein expects Duerr stock to gain as much as 80% and hit €38 by the end of 2025.   Ipsos SA (IPS)Aleksander Peterc expects the US business of Ipsos to recover next year.He recommends investing in this market research company that ranks third globally also because it has improved its margins from 10% before the pandemic to 13% in 2023.“Although Ipsos is affected by weak macroeconomic climate, its operations should prove resilient, allowing it to maintain its operating margin at around 13%, while generating a solid free cash flow,” the analyst told clients in a recent research note.Bernstein expects Ipsos stock to hit €79 over the next twelve months that suggests potential for a whopping 68% gain from here. Soitec SA (SOI)Soitec is a semiconductor manufacturer based out of Isere, France that Bernstein dubs a “potentially compelling AI story”.Aleksander Peterc is bullish on the company’s Photonics-SOI product that currently accounts for a tiny percentage of its overall revenue.But the analyst is confident that its contribution will grow significantly moving forward.“Demand for high-bandwidth data centre optical interconnects grows in step with high-performance AI/ML clusters used in [AI model] training,” which could help the Photonics-SOI revenue to grow by 40% every year, he added.Bernstein sees Soitec stock hitting €130 that translates to about a 65% upside from here.More By This Author:Why The New iPphone SE Could Disrupt Apple Stock Performance Peloton Stock More Than Doubles In 2 Months: Is The Growth Sustainable? TSMC May Pose A Long-term Threat To U.S.: Here’s Why