Evercore ISI upgrades Legrand stock rating on datacenter growth

Evercore ISI upgraded Legrand SA's stock rating to "Outperform" from "In Line" on Friday, retaining a price target of EUR175.00. The firm revised its estimates by 3% to 7% following the company's datacenter investor day, which showcased advancements in the portfolio and metrics per dollar per megawatt. The price target remained steady due to a roughly 1.5 times decrease among peers since Evercore ISI initiated coverage.

Legrand's datacenter segment now contributes over 30% of sales, with potential to surpass 45% by 2030. The company's accessible content per megawatt increases from $2.5 million to more than $3 million in low-voltage direct current systems within an 800-volt environment. Evercore ISI raised its margin targets to 21% to 22%, aligning with Legrand's remarkable gross profit margin of 50%.

The stock is trading below 15 times 2027 estimated enterprise value to EBITA, at relative lows compared to electrical equipment peers. Legrand's Energy Transition segment accounts for 22% of sales, while Essential Infrastructure represents 46%. The stock trades at a P/E ratio of 28.7, although InvestingPro analysis suggests it may be overvalued relative to its fair value.

Investors can explore more comprehensive valuation insights on the "Most Overvalued Stocks" list. Recent analyst upgrades, such as RBC Capital's upgrade to "Outperform" and Kepler Cheuvreux's "Buy" rating, highlight Legrand's strong financial performance and market potential. These developments emphasize the company's promising outlook in the data center market and its overall financial health.