On Tuesday, the investment firm Jefferies adjusted its stance on Legrand (OTC: LGRDY), shifting from a previous rating of Underperform to Hold, and concurrently increased the price target to EUR 85.00, up from EUR 78.00. The revision comes after Legrand's shares experienced significant underperformance in comparison to its industry counterparts.
The firm's analyst cited a 17% underperformance relative to competitors such as Siemens, ABB (ST:ABB), and Schneider Electric (EPA:SCHN) over the past three months as a key factor for the rating change. The analyst also noted that the current valuation reflects limited downside risk, prompting the upgrade.
According to the analyst, the forecasted adjustments to Legrand's EBITA consensus for 2024 are approximately 2%, a figure deemed insufficient to maintain the previous Underperform rating. The belief is that, although the stock might initially respond negatively to conservative guidance from management, the probability of continued underperformance is low.
The reassessment by Jefferies was informed by data from their Low Voltage database, which suggests that there is potential for an uptick in organic growth within the North American market for the fourth quarter. This potential growth is seen as a positive indicator for Legrand's performance.
Investors and stakeholders in Legrand are now looking at a Hold rating with a higher price target, indicating a change in expectations for the company's financial trajectory in the near term. The new price target of EUR 85.00 represents a revised outlook on the company's value by Jefferies.
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