On Tuesday, investment firm Jefferies adjusted its price target for Legrand SA (EPA:LEGD) (LR:FP) (OTC: LGRDY), a global specialist in electrical and digital building infrastructures, increasing it to EUR94.00 from the previous EUR85.00 while maintaining a Hold rating on the stock.
The revision comes after an observation of the European Union volumes which have shown an improvement in January, marking the first quarter of the year as the fourth consecutive quarter to witness sequential growth. This trend is noted despite Legrand's comparison effect from the first quarter of 2023, which was robust with a 10.5% increase.
Jefferies analysts pointed out that, although the comparison from the previous year appears challenging, there is a slight potential for Legrand's performance to surpass the market consensus. The analysts also noted that pricing has returned to more reasonable low single-digit levels.
The correlation between the firm's proprietary database and Legrand's organic growth is expected to become evident once again in 2024, in contrast to the fiscal years 2022 and 2023. This anticipated reemergence has led to an increase in the price target for Legrand's shares.
The new price target of EUR94.00 is based on a multiple of 15.5 times the company's earnings before interest, tax, and amortization (EBITA), which represents approximately a 15% discount to Schneider Electric (EPA:SCHN), another key player in the industry. The Hold rating suggests that Jefferies advises investors to maintain their current position in Legrand's stock without further buying or selling at this time.
InvestingPro Insights
As Jefferies updates its stance on Legrand SA (LR:FP) (OTC: LGRDY), investors are also considering the key financial metrics and market performance data provided by InvestingPro. With a current market capitalization of 27.78 billion USD and a trailing P/E ratio of 22.24, Legrand displays a solid valuation in the market. The company's gross profit margin stands impressively at 52.26% for the last twelve months as of Q4 2023, which is indicative of its efficient cost management and strong pricing power in its sector.
Legrand's commitment to shareholder returns is evident, as the company has not only maintained but also increased its dividend payments for 19 consecutive years. This is further supported by a notable dividend growth of 15.17% over the last twelve months as of Q4 2023. Moreover, Legrand's stock is trading near its 52-week high, with the price at 98.5% of this peak, reflecting investor confidence and a potentially bullish sentiment.
In terms of InvestingPro Tips, Legrand has been acknowledged for its impressive gross profit margins and its ability to operate with a moderate level of debt, ensuring financial stability. Additionally, the company's liquid assets exceeding short-term obligations demonstrate a strong liquidity position, which is essential for meeting immediate financial needs.
For investors seeking a more comprehensive analysis, InvestingPro offers additional tips on Legrand, which can be accessed through the platform. There are currently 9 more InvestingPro Tips available, which provide deeper insights into the company's financial health and market performance. Interested readers can explore these tips and gain further knowledge to inform their investment decisions. Moreover, by using the coupon code PRONEWS24, investors can enjoy an additional 10% off a yearly or biyearly Pro and Pro+ subscription, enriching their investment toolkit with valuable resources.
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