SKN | UBS Upgrades Legrand as Data-Centre Growth Reshapes Its Earnings Outlook

Key Takeaways:

• UBS upgraded Legrand from Neutral to Buy and raised its 12-month price target from €160 to €170.
• The Swiss bank increased its 2027 adjusted EBITA estimate by 15%, placing its forecast approximately 7% above market consensus.
• UBS believes accelerating data-centre investment could support stronger group-wide growth in 2027 than analysts currently anticipate.

Shares in French electrical equipment manufacturer Legrand advanced more than 2% on Monday, November 9, after UBS revised its investment assessment of the company. The Swiss bank upgraded the stock from Neutral to Buy, raised its 12-month price target from €160 to €170, and presented a more constructive earnings outlook based on the expansion of data-centre infrastructure.

The significance of the decision lies in UBS’s assessment that market expectations remain too conservative. Rather than simply responding to the current strength of the data-centre sector, the bank is arguing that the next phase of investment could produce a more substantial contribution to Legrand’s earnings than existing consensus forecasts reflect.

UBS Raises Earnings Forecasts Beyond Market Consensus

The most consequential element of the upgrade is UBS’s revision to its forward estimates. The bank increased its 2027 adjusted earnings before interest, taxes, depreciation and amortisation (EBITA) forecast by 15%, bringing it approximately 7% above analyst consensus. Its 2027 earnings-per-share estimate also rose by 17%, from €6.23 to €7.27, compared with a consensus forecast of €6.88.

UBS additionally raised its 2028 earnings-per-share projection to €8.25 from €6.90, while leaving its 2026 estimate unchanged at €5.73. These revisions indicate that the bank’s more positive assessment is concentrated on the company’s medium-term earnings capacity rather than a near-term adjustment alone.

The revised €170 price target reflects UBS’s updated valuation assessment. The bank also outlined a more optimistic scenario of €190 and a downside scenario of €105, illustrating the range of potential outcomes considered in its analysis. Importantly, the target increase incorporates an updated discounted cash-flow calculation, even with a higher discount rate applied in line with its treatment of comparable companies.

Why UBS Sees Data Centres as the Main Growth Catalyst

UBS’s central argument is that investors may be underestimating the pace of Legrand’s data-centre expansion. Management expects sales in the segment to increase by 35% to 40% in 2026, following growth of more than 40% in 2025. UBS estimates that growth approached 50% in the third quarter and could accelerate further in 2027.

According to the bank, data-centre activity alone could contribute approximately 14% growth at group level in 2027. UBS consequently forecasts overall group growth of 14%, compared with the market consensus of 10%. Its analysis also considers Legrand’s response to the transition towards 800-volt direct-current power systems, including new power-distribution and battery-rack products. UBS sees these developments as relevant to the company’s ability to maintain its position as data-centre electrical requirements evolve.

Valuation, Execution and the Risks UBS Is Monitoring

UBS noted that Legrand trades at approximately 18.4 times expected 2027 earnings and 14.5 times 2027 enterprise value to EBITA. The bank considers these multiples relatively attractive against the company’s historical valuation ranges and notes an average discount of around 8% to European peers Schneider Electric and ABB.

However, the upgrade does not remove execution risks. UBS identified potential delays to data-centre projects in Texas and Ohio following the US midterm elections, although it expects delays rather than outright cancellations. Other considerations include cyclical residential demand, which represents approximately 40% of group sales, limited scope for additional margin expansion and competition in home automation.

For international investors, the broader significance of UBS’s research is its assessment of how digital infrastructure investment may translate into industrial earnings growth. The bank’s revised forecasts offer a more optimistic medium-term framework, but the outlook remains dependent on project execution, demand conditions and valuation discipline. For a confidential discussion regarding portfolio exposure to global infrastructure growth and your cross-border wealth structure, contact our senior advisory team.