Prysmian Sell-Off an Overreaction, Presents Buying Opportunity: Citi

Analysts at Citi on Monday reaffirmed their “buy” rating on cable maker Prysmian, viewing the stock's recent sharp decline as a compelling buying opportunity. The bank maintained a €136 price target, suggesting a potential upside of 37.3% from the current price, or 38.5% when including the expected dividend yield.

Valuation Disconnect

According to Citi's research note, Prysmian's shares have fallen by 31% since the end of June, pushing the stock's valuation to the lower end of its historical range. Analysts attribute the sell-off primarily to a broader cooling of investor sentiment toward the datacentre sector, which accounts for a high single-digit percentage of Prysmian's sales.

Despite the share price drop, Citi noted that earnings forecasts for the company have remained resilient. The bank highlighted that Prysmian now trades at a discount to its European electricals peers, even though it exhibits higher earnings growth prospects.

Earnings Outlook and Atkore Integration

Citi anticipates a positive catalyst when Prysmian reports its third-quarter results on October 29. The bank expects the company to raise its full-year 2026 adjusted EBITDA guidance to a range of €2.95 billion to €3 billion, a move that is reportedly widely expected by the market.

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This forecast is supported by solid underlying business performance and the initial two-month contribution from the recent acquisition of Atkore, a manufacturer of cable-management products. The Atkore deal is expected to add approximately 13% to Prysmian's pro forma group sales, and Citi has raised its adjusted earnings per share (EPS) forecasts for 2026, 2027, and 2028 by 2%, 9%, and 9% respectively as a result.

Potential Catalysts and Key Risks

Looking ahead, Citi identified several potential triggers that could drive the stock higher, while also noting the primary risk factor.

• Future Catalysts: Potential positive drivers include new fiber deals, a capital markets day expected in the first half of 2027, and a possible U.S. stock market listing, which the company's CEO described in July as a "top priority."
• Key Risk: The main risk to the investment thesis remains a further slowdown or fading investment in the datacentre market.

Citi's analysis concluded that Prysmian's current share price is trading closer to its bear-case scenario of €94, which assumes a sharp earnings decline after 2030, rather than its bull-case estimate of €162.