Schneider Electric stock rating upgraded to Buy at HSBC

On Tuesday, HSBC analysts raised their outlook on Schneider Electric (EPA:SCHN) SE (SU:FP) (OTC: SBGSF) stock, upgrading the rating from Hold to Buy and setting a price target of EUR250.00. The industrial giant, with a market capitalization of $129.87 billion, has seen its stock decline 6.3% over the past week, potentially creating an attractive entry point according to InvestingPro data. The upgrade follows Schneider Electric’s Q4 2024 performance report, which indicated positive developments in the company’s Industrial Automation (IA) division, with expectations of improved sales in the second half of 2025.

Schneider Electric expressed confidence in its order visibility during the Q4 2024 results announcement, particularly noting the improvement in orders from China at the end of the year. The company anticipates these orders will convert into sales in H2 2025. Additionally, Schneider’s Energy Management sector reported a robust 15% growth in Q4 2024, with projections of continued strong performance in 2025. InvestingPro data shows the company maintains strong fundamentals with a 42.64% gross profit margin and a healthy overall financial score of 2.61. This forecast is bolstered by demand in North America and from data centers.

The company’s data center orders, which accounted for 24% of the total orders in 2024, are primarily driven by pure data centers (20%). Approximately one-fifth of these orders are associated with AI, while the remainder are tied to traditional cloud services. Schneider Electric expects that the data center segment will consistently contribute to the company’s growth through to 2027.

HSBC analysts have identified an approximate 15% upside potential in Schneider Electric’s stock with the new price target. The upgrade to a Buy rating is justified by the anticipated robust organic growth in end-markets and the potential for margin expansion. While trading at a P/E ratio of 28.04, the company has demonstrated consistent strength, including 11 consecutive years of dividend increases. For deeper insights into Schneider Electric’s valuation and growth prospects, investors can access comprehensive analysis through InvestingPro’s detailed research reports.

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