Legrand

We are upgrading our recommendation on Legrand from Reduce to Add following the group’s CMD where the group provided updated 2030 targets. On sales, Legrand now expects organic growth of 6-8% compared to 3-5% before. This marks a clear acceleration in top-line growth, with the group now anticipating its addressable Data Center market (32% of H1 2026 sales) to grow in the mid-to-high teens, up from high single digits at its CMD in 2024. The growth in the other two markets, Energy Transition and Essential Infrastructures (broader Buildings market, GDP-driven) is unchanged at mid-single-digit and low-single-digit. Additionally, CMD indicated a modest acceleration in inorganic growth, with Legrand now aiming for c.5% sales growth from acquisitions, up from 3-5% previously.

On margin targets, Legrand now expects an adjusted operating margin of 21-22% versus c.20% before. In our view, the majority of this upgrade is tied to the operating leverage arising out of the Data-centre-led North American market, where margins have already picked up in the first half of this year. Taken together, we have raised our margin forecasts for 2026E, 2027E, and 2028E by 20bps, 60bps and 70bps respectively. Moreover, we have also reset the sales and EBITDA growth rates in our long-term model and the reference multiples for our NAV calculations, resulting in approximately 12% and 13% increases, respectively, in our DCF and NAV per share. Lastly, we have reset the peer group valuation to better reflect the group business model and end-market exposures, accounting for the rest of the upgrade to our target price.

Expert Opinion:
Legrand is one of the few plays in Europe (outside semiconductors) that is truly exposed to the datacenter capex cycle in the US. Our new TP leaves 15% upside. Legrand is a high-quality name and is a stock to buy and hold for the long run.


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