Last Update 10 Dec 25

Fair value Increased 0.59%

LR: Data Center Expansion And Cash Generation Will Support Balanced Future Performance

Legrand's analyst price target has been nudged higher to about EUR 143, reflecting analysts' slightly stronger confidence in the group's cash generation and expanding data center exposure, despite some mixed rating actions around the EUR 150 to EUR 167 target range.

Analyst Commentary

Recent Street research paints a mixed but generally constructive picture for Legrand, with several target changes and rating moves centering around the EUR 150 to EUR 167 range. The commentary highlights both confidence in the company’s execution and some caution around valuation after the recent share price performance.

Bullish Takeaways

Bullish analysts point to strong and visible cash generation following the latest quarterly results, viewing this as a key support for the higher price targets around EUR 150 and above.
The rapid expansion in data center exposure, rising from low single digits to over a quarter of group sales over the past decade, is seen as a structural growth driver that can underpin premium valuation multiples.
Upgrades to Buy ratings, even when paired with modest cuts in target price, suggest that execution on growth initiatives and margin resilience is seen as sufficient to offset macro and cyclical risks.
Higher targets in the mid EUR 160s are framed as reflecting upside from continued mix improvement toward higher growth, higher margin segments, particularly in digital infrastructure.

Bearish Takeaways

Bearish analysts see the current share price as close to fair value around EUR 150, arguing that much of the cash generation and data center growth story is already reflected in the stock.
The move from more positive to neutral ratings in some cases indicates concern that near term upside could be capped if execution stumbles or if data center demand normalizes from current elevated levels.
There is caution that, while target prices remain relatively high, the risk reward profile has become less attractive, with limited room for disappointment on margins or capital allocation.
Some of the recent target trims, even within a constructive long term view, signal sensitivity to broader sector valuations and the possibility of multiple compression if growth moderates.

What's in the News

Confirmed 2025 earnings guidance, with Legrand expecting sales growth of 10% to 12% excluding currency effects, signaling confidence in underlying demand and execution (Key Developments)

Valuation Changes

Fair Value has risen slightly, moving from approximately €141.88 to €142.71, indicating a modest uplift in the intrinsic value estimate.
Discount Rate has increased marginally from about 9.05% to 9.16%, implying a slightly higher required return in the valuation model.
Revenue Growth has edged up from roughly 7.32% to 7.33%, reflecting a very small upward revision to long term top line expectations.
Net Profit Margin has improved fractionally from about 14.22% to 14.23%, signaling a minimal enhancement in projected profitability.
Future P/E has risen slightly from around 29.2x to 29.4x, pointing to a modest increase in the valuation multiple applied to forward earnings.

Exceptional demand for digital infrastructure, energy efficiency, and smart building solutions is fueling Legrand's sustained organic growth and supports premium margins.
Strategic acquisitions and operational improvements are strengthening earnings stability and expanding the company's geographic reach.
Heavy reliance on data center growth masks weakness in core building markets, exposes Legrand to concentration, trade, and margin risks, and demands continual innovation to maintain competitiveness.

Catalysts

About Legrand

Manufactures, distributes, and sells electrical and digital building infrastructures in Europe, North and Central America, and internationally.What are the underlying business or industry changes driving this perspective?

Surging investment in data centers, driven by the growth of artificial intelligence and the increasing digitalization of infrastructure globally, is fueling exceptionally strong demand for Legrand's white space products. This trend, supported by a large backlog and above-1x book-to-bill ratio, is expected to sustain high organic revenue growth through at least 2030.
Rising global electrification and urbanization, especially in emerging markets, is expanding the addressable market for Legrand's electrical infrastructure and smart building solutions. This underpins long-term revenue growth as construction activity shifts to high-growth geographies.
The accelerating shift toward energy efficiency and sustainability, with stricter regulations and higher demand for green buildings/data centers, is driving adoption of Legrand's energy management and efficiency-oriented products. This is likely to boost both revenue and help maintain premium margins as customers pay for value-added solutions.
Active and ongoing M&A, focused on companies tied to the energy and digital transition, is scaling Legrand's capabilities and geographic reach. This inorganic growth is set to complement organic gains and enhance earnings stability across cycles.
Operational improvements-including manufacturing automation, supply chain adaptation (pricing actions, tariff management), and efficiency initiatives-are supporting high and potentially expanding operating margins (currently above 20%), with upside to net margins and free cash flow if current growth persists.

Legrand Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Legrand's revenue will grow by 6.4% annually over the next 3 years.
Analysts assume that profit margins will increase from 13.2% today to 13.7% in 3 years time.
Analysts expect earnings to reach €1.5 billion (and earnings per share of €5.77) by about September 2028, up from €1.2 billion today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as €1.2 billion.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 28.5x on those 2028 earnings, up from 27.7x today. This future PE is greater than the current PE for the GB Electrical industry at 14.5x.
Analysts expect the number of shares outstanding to remain consistent over the next 3 years.
To value all of this in today's terms, we will use a discount rate of 8.55%, as per the Simply Wall St company report.

Legrand Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Legrand's recent and projected sales growth is overwhelmingly driven by data centers, while its core building-related business remains flat, exposing the company to concentration risk if the data center market slows or becomes saturated, thereby threatening long-term revenue growth.
The company faces ongoing risks from tariff and trade policy changes, with nearly 50% of U.S. cost of goods sold being imported, making Legrand vulnerable to geopolitical tensions and protectionist measures that could compress gross and net margins.
There is significant weakness in key end markets such as U.S. residential and office construction, with no clear signs of recovery before at least 2026, which could dampen revenue prospects if the non-data center parts of the business remain stagnant longer term.
Despite recent efficiencies, Legrand's medium-term margin guidance remains at 20%, and management expects midterm dilution from acquisitions, implying that current high profit margins may not be sustainable and could revert downward, impacting earnings.
The rapid growth in data center-related products may require significant ongoing investment in innovation, capacity, and compliance (such as energy efficiency and sustainability), and if Legrand fails to keep pace with evolving technology (e.g., move to wireless, system integration, or direct-to-chip cooling), it risks losing market relevance and future revenue streams.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of €129.521 for Legrand based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of €165.0, and the most bearish reporting a price target of just €82.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be €11.1 billion, earnings will come to €1.5 billion, and it would be trading on a PE ratio of 28.5x, assuming you use a discount rate of 8.6%.
Given the current share price of €128.35, the analyst price target of €129.52 is 0.9% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

Have other thoughts on Legrand?

Create your own narrative on this stock, and estimate its Fair Value using our Valuator tool.

Create Narrative

How well do narratives help inform your perspective?

Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

Expanding Data Center Focus Will Drive Future Margin And Earnings Strength