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On Thursday, Citi analyst Martin Wilkie changed the outlook for Schneider Electric SE (EPA:SCHN:FP) (OTC: SBGSY), upgrading the stock from Neutral to Buy. The new price target set for the company is €245.00, adjusted from the previous target of €250.00. The company, currently valued at $132.35 billion, has shown resilience with a 6.27% revenue growth over the last twelve months, according to InvestingPro data. Wilkie’s assessment points to a shift in the market’s valuation of Schneider Electric, noting that the company’s share price de-rating has brought its valuation in line with industry peers such as Legrand (EPA:LEGD) and ABB (ST:ABB) for the first time in nearly three years. InvestingPro analysis shows the stock currently trades at a P/E ratio of 27.38, which is relatively high compared to near-term earnings growth expectations. The stock has experienced a notable 13.1% decline over the past six months, potentially creating an entry opportunity for investors.
Wilkie believes that the market has already accounted for the possibility of Schneider Electric’s mid-term growth falling short of its targets. However, he remains optimistic about the company’s long-term prospects, describing the outlook as "structurally attractive." This view is supported by InvestingPro’s Financial Health Score of "GOOD," and the company’s impressive track record of maintaining dividend payments for 30 consecutive years, demonstrating consistent financial stability. The analyst also mentions that the direct tariff risk appears to be limited and anticipates that the company will experience positive organic sales growth in the years 2025 and 2026, even if a mild recession occurs.
The updated data center outlook, which was recently published in collaboration with Citi’s US research team, suggests that hyperscaler capital expenditure is expected to grow by 35% in 2025 and by 15% in 2026. Although this growth rate is slower than in previous years, Wilkie suggests that it is likely to exceed investor expectations.
Citi’s upgrade to a Buy rating reflects a positive shift in perception towards Schneider Electric’s shares, as the analyst sees an attractive valuation in the context of the sector. Wilkie’s commentary underscores a belief in the company’s resilience and potential for growth, despite a more conservative growth outlook in the medium term.
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