Goldman Sachs upgrades Legrand on expectations that data-centre buildout will outpace valuation concerns

Goldman Sachs on Wednesday upgraded Legrand, the French maker of electrical and digital building infrastructure, to “buy” from “neutral” and set a 12-month price target of €172, according to a report carried by Yahoo Finance. The change reflects the bank’s view that Legrand stands to benefit as the global data-centre buildout accelerates, even as some market participants appear to be discounting the sector’s momentum.

In the note, Goldman said the key issue was not a lack of underlying demand, but valuation. The bank argued that the market’s concerns have left Legrand trading on less demanding terms than its peers, creating what it sees as a more favorable setup for forward returns if data-centre-related spending continues to expand.

Legrand supplies equipment used in both the power and digital layers of buildings. That includes products that support the delivery and management of electricity and systems that help buildings handle communications and connectivity. As data centres scale up, the companies that provide the infrastructure that keeps those facilities powered and networked can see demand rise alongside construction and capacity additions.

The bank’s upgrade also points to how quickly sentiment can move relative to new capacity. Goldman’s framing suggests that worries around data-centre demand, or the durability of the cycle, have weighed on the stock. With the upgrade, Goldman effectively told investors to expect the buildout theme to translate into earnings more reliably than the current valuation implies.

The “buy” call indicates Goldman believes the risk-reward has improved compared with the bank’s prior stance. However, the publicly viewable summary of the note does not spell out the specific assumptions behind its €172 target, nor does it provide segment-level detail such as how much of Legrand’s revenue exposure Goldman expects to come from data centres versus broader commercial and residential construction.

A key part of Goldman’s argument is the timing mismatch between sector expectations and pricing. If investors have already priced in a slowdown or reduced visibility for the data-centre supply chain, Goldman’s valuation-lag thesis indicates it expects the market to re-rate the stock as results and order activity (or similar indicators) catch up.

Still, some important context remains undisclosed in the report summary. The excerpt does not include management guidance, order book figures, or updated forecasts for Legrand’s financial metrics. It also does not clarify what Goldman specifically means by “valuation lags peers” in practical terms, such as which peer set the bank used and which multiples it compared.

For Legrand shareholders and investors monitoring the data-centre supply chain, the next test will be whether company updates and broader industry indicates align with Goldman’s confidence. Market participants will also watch for whether valuation spreads among building-infrastructure names narrow or widen as data-centre capex expectations evolve over the coming quarters.