Barclays moved Legrand SA to an Overweight rating from Equal Weight on Tuesday, saying investors appear to be too cautious about the next two years of demand tied to AI-driven data centre deployment and too pessimistic about the long-term effects of a move toward 800-volt direct current (800VDC) power systems.
The broker bumped its price target on Legrand to €185 from €159, implying roughly 29% upside from the company's July 3 closing price of €143.35. In Paris trading, Legrand shares rose 1.7% to €145.45, outpacing the CAC 40's 0.6% gain that day.
Alongside the rating change, Barclays increased its adjusted EBITA forecasts for 2026 through 2028 by between 4% and 6%, attributing the revisions to stronger-than-anticipated data centre construction activity and shifts within Legrand's product mix. The bank contends that consensus estimates are currently too conservative on short-term data centre demand as AI infrastructure rollouts accelerate.
Barclays provided a peak estimate for the addressable market for electrical equipment, cooling and services related to data centres at about $140 billion in 2028. That figure assumes Western suppliers win only a constrained portion of the Chinese market, according to the broker's note.
On the industry's move to 800VDC power architectures, Barclays said investor concerns about an earnings hit to Legrand are overstated. While the new architecture is anticipated to reduce demand for certain traditional electrical components - such as uninterruptible power supplies and power distribution units - Barclays points out that Legrand has been repositioning its portfolio toward faster-growing categories, including busbars, cooling products and services. That repositioning, the bank argues, should limit the long-term earnings impact.
Barclays' timeline for 800VDC adoption suggests deployments will represent only a modest share of new data centre builds beginning in late 2027, rising to around 30% by 2029. The broker said that pace should give suppliers time to adapt their product offerings. The note also highlighted that Legrand has completed multiple data centre-focused acquisitions this year to bolster exposure to higher-growth segments.
Market reaction and context
Shares reacted positively to the upgrade and higher target, reflecting investor attention to AI-driven infrastructure spending and the company's strategic moves to align its product mix with anticipated demand drivers.