Jefferies upgrades Legrand stock rating to Buy on datacenter growth

Investing.com - Jefferies has upgraded Legrand SA (EPA: LEGD) stock rating to Buy with a price target of €167, citing the company’s expanding datacenter business and potential recovery in other segments.

Legrand has transformed its business profile over the past decade, growing its datacenter exposure from 5% to 27% through strategic acquisitions, according to Jefferies’ October 12 report.

The investment firm projects this segment will reach 36% of company revenue by 2030, growing at an 11% compound annual growth rate.

Jefferies analysts highlight Legrand’s unique positioning in the datacenter market, with approximately 80% exposure to the more stable "white space" segment and 55% of revenues linked to hyperscalers.

The firm notes that datacenter momentum is accelerating, with hyperscaler capital expenditures projected to grow 67% in 2025 and 26% in 2026.

The report points out that about 60% of Legrand’s non-datacenter business is currently at cyclical lows, with volumes down mid-teens compared to 2019 levels. These segments, including U.S. office space (down 35%) and U.S. residential (down 20%), are showing early signs of recovery as interest rates ease and return-to-office trends normalize.

Jefferies forecasts 8% and 6% organic revenue growth for Legrand in 2026 and 2027, respectively, placing their estimates 4-5% above consensus.

The firm considers Legrand’s €15 billion 2030 revenue target conservative, projecting €18 billion as more realistic, which would represent approximately 25% higher profit than current consensus estimates.

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