Legrand Shares Rally After Morgan Stanley Names It a 'Top Pick'

Shares of Legrand (LEGD.PA) rallied on Tuesday after analysts at Morgan Stanley designated the electrical equipment manufacturer as their new top pick in the European capital goods sector. The bank raised its price target on the stock, citing a compelling catalyst path and strong underlying business performance driven by its data center segment.

Analyst Upgrade Drives Gains

Morgan Stanley reaffirmed its Overweight rating on Legrand and increased its price target to €160 from a previous €155. In a note to clients, the bank argued that Legrand offers a more interesting near-term outlook compared to its large-cap peer, Schneider Electric.

The endorsement helped push Legrand shares up 2.7% to €140.05 in Paris trading. The move placed the stock among the top performers on France's CAC 40 index for the day.

Strong Fundamentals Underpin Confidence

The analyst upgrade is supported by Legrand's own robust financial results and guidance. The company had already raised its sales growth forecast for the full year 2026, bolstered by strong performance in high-growth areas.

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Key fundamental drivers highlighted by Morgan Stanley include:

• First-half organic sales growth of 9.8%.
• Rapid expansion in its data center business, which now accounts for nearly a third of total revenue.
• Global growth in the data center segment exceeding 30%.

Valuation and Market Context

Morgan Stanley noted that Legrand's stock had recently underperformed rivals like ABB and Schneider Electric, making its valuation appear more attractive. The bank's analysts suggested this performance gap seems "increasingly unjustified" and forecast 10% organic growth for Legrand in 2026.

The stock's advance occurred within a supportive market backdrop, with the CAC 40 trading in positive territory and no major macroeconomic data releases from the eurozone acting as a headwind.