Barclays moved to reweight its coverage of major European electrical-equipment firms on Monday, elevating Schneider Electric to Overweight and raising ABB to Equal Weight, while lowering its stance on Legrand and Rexel. The bank also adjusted its price targets, lifting Schneider’s to 305 euros from 270 euros and ABB’s to 67 Swiss francs from 51 francs, and reducing Legrand’s to 144 euros from 175 euros and Rexel’s to 29 euros from 33 euros.
The analytical case behind the reshuffle rests on the bank’s view that infrastructure-linked capital expenditure - spanning energy markets, power-grid upgrades and AI data-center investment - is unlikely to cool, even as traditional construction markets come under renewed strain from rising bond yields and persistent inflation.
Analysts led by George Featherstone explicitly compared the current environment to the aftermath of the Ukraine conflict in 2022/23. In that earlier episode, supply-chain shocks and mounting inflation initially dented earnings, only to be followed by a strong pricing cycle that restored margins. Barclays’ team suggested a similar dynamic could play out once cost pressures and supply constraints settle.
"If there’s a rule of thumb from 2022/23, then we should expect energy (e.g. LNG) and power capex to also increase," the analysts wrote, adding that pricing for industrials could surprise to the upside in 2027 as increases typically lag inflation by around six months.
Barclays highlighted that the most prominent winners from a renewed investment cycle would be electrical equipment companies with significant exposure to capex end markets. In its view, that positioning puts Schneider and ABB ahead of Legrand and Rexel.
For Schneider Electric, Barclays noted that data centers and grid infrastructure, together with energy markets, account for roughly half of the company’s earnings. The bank pointed to Schneider and Vertiv as sharing the top revenue position in the global data-center power infrastructure market, and said that gives Schneider the strongest earnings leverage among European peers to the AI capex theme.
On the AI investment front, Barclays wrote there is "zero sign of a slowdown in investment in AI," citing analysis from its U.S. colleagues that estimates global hyperscaler capex could reach roughly $1 trillion by 2028. Barclays added that consensus forecasts currently understate that ramp by more than $300 billion.
ABB’s rating and target were lifted on the basis of the company’s exposure to late-cycle energy markets, notably liquefied natural gas (LNG). Barclays expects an investment pick-up in those markets as countries look to diversify supply away from the Middle East. The analysts also pointed to ABB’s execution record as a factor in investors’ preference for the company amid macro uncertainty.
"ABB’s execution track record is much admired by investors...and despite our broader concerns about intensifying competition in MV electrical equipment, ABB is likely viewed as a safe pair of hands given the macro uncertainty," the analysts wrote.
By contrast, Barclays downgraded Legrand and Rexel on the grounds that both derive more than two-thirds of sales from construction activity. With bond yields on the rise, the bank warned that even a flat construction market would be a constructive outcome, calling "a flat construction market" a positive result over the next 18 months.
Separately, Barclays kept Siemens at Underweight, flagging susceptibility in its European and Chinese end markets as well as potential delays to Middle East rail projects.
The bank’s repositioning reflects a split view across electrical-equipment names: a tilt toward firms with stronger exposure to capex-driven end markets such as energy, grids and data centers, and caution towards those more concentrated in construction-facing revenues. The changes combine updated price targets and ratings with a macro-linked thematic outlook that expects investment in certain infrastructure segments to remain robust despite near-term cost and financing headwinds.