Berenberg upgrades Landis+Gyr stock to Buy on potential EMEA divestment

Berenberg upgraded Landis+Gyr Group AG (SIX:LAND) to Buy from Hold, significantly raising its price target to CHF80.00 from CHF54.00, an increase of 48%. This upgrade is driven by the potential divestment of the company's EMEA business, growing demand for US grid infrastructure, and Landis+Gyr's current 50% valuation discount compared to its peer Itron, which Berenberg views as an attractive entry point for investors.

Analysis

Berenberg has upgraded Landis+Gyr Group AG (SIX:LAND) to Buy from Hold, accompanied by a significant 48% increase in its price target to CHF80.00 from CHF54.00. This bullish revision is underpinned by several key factors. A primary near-term catalyst identified is the potential divestment of the company's EMEA business, which could unlock value for shareholders. The outlook is further supported by strong secular demand for grid infrastructure in the United States over the next two years. From a valuation perspective, the analysis highlights a compelling discrepancy, with Landis+Gyr currently trading at a 50% discount to its closest peer, Itron (NASDAQ:ITRI). Berenberg views this gap as an attractive entry point, with its new price target, derived from a blended EV/EBITDA and DCF model, representing approximately 19% upside from the current share price.

Key Decisions for Investors

• Investors should consider the 50% valuation discount of Landis+Gyr relative to its peer Itron as a potentially attractive entry point for exposure to the smart metering sector.
• The potential divestment of the EMEA business should be monitored closely as it is positioned as a significant near-term catalyst that could unlock shareholder value.
• Given the stock's linkage to US grid infrastructure demand, investors may view Landis+Gyr as a targeted way to gain exposure to this multi-year growth theme.