Morgan Stanley Lifts Legrand Price Target on Upgraded Growth, M&A Outlook

Morgan Stanley has raised its price target on French electrical equipment manufacturer Legrand to €166 from €160, reaffirming its "overweight" rating and top-pick status for the stock. The bank's analysts cited a more robust outlook for growth and acquisitions following the company's recent capital markets day.

Upgraded Financial Forecasts

In a research note, Morgan Stanley detailed several upward revisions to its financial model for Legrand. The bank increased its earnings-per-share (EPS) forecasts for 2026, 2027, and 2028 by 0.7%, 2.1%, and 4%, respectively. The analysts now project an operating profit of €2.76 billion for 2027, which is 6.5% above the Visible Alpha consensus.

The valuation adjustment is based on new assumptions, including:

• Organic growth of 10.7% in 2027.
• Acquisitions contributing approximately 4% to annual sales growth from 2027 to 2030.

While the bank's base case price target is now €166, its bull case scenario projects a potential share price of €200, with the bear case remaining at €120.

Capital Markets Day Boosts Confidence

Ad

The revised outlook from Morgan Stanley follows Legrand's own upgraded long-term guidance. At its capital markets day, Legrand management said it now expects annual organic sales growth of 6% to 8% between 2027 and 2030, an increase from Morgan Stanley's prior assumption of 5% to 7%.

Legrand also guided for average operating margins between 21% and 22% for the period, up from a 20.5% to 21% forecast for 2026. The company anticipates that bolt-on acquisitions will add about 5% to its annual sales growth.

Data Centers a Key Driver Amid Concerns

Data centers continue to be a primary growth engine for Legrand. The company expects sales from this segment to grow at a mid-to-high teens rate through 2030, increasing its contribution to group revenue from an estimated 32% in 2026 to around 43% by 2030, before accounting for future acquisitions.

Morgan Stanley noted that some investors remain concerned about the industry's shift toward 800-volt direct-current systems and Legrand's ability to compete in newer areas like liquid cooling and power protection. Legrand management stated it expects the transition to be gradual. The bank also pointed out that Legrand's data center sales are currently about one-third the size of key competitor Schneider Electric.