Legrand Placed on 'Positive Catalyst Watch' by J.P. Morgan on Data Center Outlook

J.P. Morgan has placed French electrical equipment firm Legrand SA (LEGD) on a 'Positive Catalyst Watch' ahead of its Capital Markets Day on September 29. The bank's analysts expect the event to reveal a compelling long-term growth outlook, underpinned by accelerating demand from the data center industry.

J.P. Morgan reaffirmed its "Overweight" rating on the stock and maintained its street-high price target of €200.00. This target suggests a potential upside of approximately 42% from the stock's recent closing price of €140.90.

Data Center Boom Fuels Optimism

The bank's positive thesis is anchored in Legrand's significant and growing presence in the data center market, which now constitutes about 30% of the company's total sales. According to J.P. Morgan, this exposure is a larger share than that of its key competitor, Schneider Electric SE (SCHN).

Legrand's data center business has demonstrated strong performance, achieving an 18% like-for-like compound annual growth rate (CAGR) since 2019. J.P. Morgan forecasts this momentum will continue, projecting annual growth of 20% to 30%+ in the segment through 2030. This is expected to contribute between 7 and 10 percentage points to Legrand's overall group-level growth.

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Capital Markets Day in Focus

Analysts at J.P. Morgan anticipate that Legrand's management will use the investor event to outline an organic revenue growth target of 7% to 10% through 2030. Such a forecast would surpass the current market consensus of roughly 6% and align Legrand with the growth trajectory of sector leader Schneider Electric.

"Expectations are relatively muted and there are concerns regarding the data center portfolio alignment over the longer term," J.P. Morgan analysts noted. "We expect the company to give a reassuring message on growth and positioning at the CMD, which should ultimately be positive for the shares."

Management is also expected to present a detailed technology roadmap to address investor concerns about its positioning for next-generation AI data centers. The remaining two-thirds of Legrand's business, which is primarily exposed to European residential and U.S. commercial construction, has reportedly stabilized after facing macroeconomic headwinds.