Citi raises Legrand stock price target to EUR140 on datacentre growth

Citi raised its price target on Legrand SA (LEGD) to EUR140.00 from EUR120.00, maintaining a Buy rating, following the electrical equipment manufacturer's Q2 sales beat and an upward revision of its fiscal year 2025 organic sales growth guidance to 5-7% from the previous 2-4%. This improved performance is primarily attributed to strength in the datacentre segment, with Citi noting potential for market momentum to drive expectations towards the upper end of the new guidance and additional growth support from the U.S. office market, reflecting higher forecasts and increased valuation multiples.

Analysis

Citigroup has upgraded its price target for Legrand SA (LEGD) to EUR 140.00 from EUR 120.00, reinforcing its 'Buy' rating on the electrical equipment manufacturer. This revision is directly linked to a strong Q2 sales performance and, more significantly, an upward revision of the company's fiscal year 2025 organic sales growth guidance to 5-7%, a substantial increase from the prior 2-4% range. The primary driver for this improved outlook is identified as the datacentre segment, where investments in 'white space' (server rooms) are accelerating. The analysis suggests that the Q2 results alone are strong enough to elevate consensus FY25 organic sales estimates to approximately 6.5%. Furthermore, Citi sees potential for additional upside from two sources: broader market momentum pushing growth toward the upper end of the revised guidance and a potential recovery in the U.S. office market later in the year. The new price target is underpinned by these higher forecasts, an expansion of EV/EBITA multiples consistent with Citi's ROCE/growth framework, and a valuation roll-forward to 2026.

Key Decisions for Investors

• Investors should view the revised FY25 sales growth guidance of 5-7% as a key positive catalyst, reflecting fundamental strength and providing a clear quantitative benchmark for future performance.
• Given the dependency on the datacentre segment, it is critical to monitor industry-wide capital expenditure trends and any commentary on 'white space' investment cycles, as this is the core driver of the bullish thesis.
• Consider that the new EUR 140 price target implies a valuation re-rating based on expanded multiples, meaning the market may be willing to pay a higher premium for Legrand's growth prospects.