Mersen (EPA:CBLP) shares vaulted 8.5% after Berenberg upgraded the French electrical components manufacturer from "hold" to "buy" in the wake of strong results for the first half of the year and an upward revision to full-year guidance.
The broker increased its price target by 4% to €50 per share, pointing to momentum in Mersen's electrical power unit. Berenberg specifically highlighted demand coming from data centres and grid infrastructure as the primary drivers behind the unit's growth.
On Thursday the company raised its full-year guidance, moving it to the top of the previously announced range for both revenue and margins. That adjustment followed the stronger-than-expected performance in the first half and underpinned the broker's decision to lift its recommendation.
Berenberg outlined expectations for Mersen's data centre business, stating that the firm anticipates data centre revenues will exceed €40 million in 2026, which the broker described as roughly double 2025 levels. In addition, the silicon semiconductor segment was singled out as continuing to perform well.
At the same time, the broker drew attention to ongoing weakness in Mersen's advanced materials division, attributing that softness to subdued conditions in the solar and chemicals markets. Despite that division's underperformance, Berenberg assessed the stock's valuation as undemanding, assigning a 12x multiple to 2027 earnings.
The market reaction was immediate, with the share jump reflecting investor response to the combination of upgraded guidance, optimistic unit-level growth expectations, and a higher price target. The upgrade and target increase were anchored in the interplay of strong electrical power activity, improving full-year projections, and the continued strength of the silicon semiconductor business, while acknowledging the drag from advanced materials.
Contextual note - The details above are drawn from Berenberg's upgrade and the company's guidance update as reported following Mersen's first-half results.