Legrand: share price ends the day lower, analyst no longer Buy
December 19, 2023 at 11:41 am EST
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Legrand shares ended the session down by nearly 1.7% following a negative analysis by UBS. However, it retains a gain of nearly 27% since January 1.
UBS downgrades its recommendation on Legrand directly from 'buy' to 'sell', with a price target reduced from €108 to €82, a new target implying a downside potential of 15% for the share of the French electrical infrastructure supplier.
Justifying its position on the dossier by "limited growth potential, cyclical risks and a demanding valuation", the broker shows a preference for Schindler, Kone and Assa Abloy in the quality-growth building sector.
Morgan Stanley had also lowered its recommendation on Legrand shares on Tuesday, from "overweight" to "weight in line", with a price target reduced from 100 to 98 euros.
In a study devoted to the European capital goods sector, the broker explains that it perceives 'limited' potential for improvement in consensus estimates for 2024.
While it considers the electrification of the Old Continent to remain a buoyant investment theme, the broker points to less dynamic markets in the short term, notably due to the French group's high exposure to the residential segment.
We still see Legrand as one of the best business models in the European industrial sector, and envisage a favorable medium-term scenario, but we see few catalysts likely to lead it to outperform in the immediate future", he concludes.
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Legrand is the global specialist in electrical and digital building infrastructure. Its comprehensive range, suitable for the commercial, industrial, and residential segments of the low voltage market, makes Legrand a benchmark for customers worldwide. Close to its markets and focused on its customers, Legrand has commercial and industrial operations in over 90 countries. The group benefits from solid, long-term growth levers.
Geographically, 41.4% of net sales are generated Europe region, 38.6% in North and Central America and 20% in the rest of the world.
In terms of product offering, 36% of its sales come from products with enhanced value in use (datacenters, connected products in the Eliot program, and energy efficiency programs).
In addition, the group benefits from very solid social and technological megatrends which will support its long-term development.