J.P. Morgan has placed Italian cable manufacturer Prysmian on a positive Catalyst Watch, reiterating its "overweight" recommendation and maintaining a €172 price target in a note dated Monday. The broker cited a marked uptick in optical fiber prices that, it says, could translate into significant margin expansion for Prysmian in the second half of 2026 and into 2027 - gains the broker believes are not yet fully incorporated into consensus projections.
At the market close on June 5, Prysmian shares were trading at €145.35, representing a 5% decline since J.P. Morgan published its Digital Solutions review last month, even as the analysts noted further encouraging industry developments for optical fiber.
J.P. Morgan highlighted valuation metrics for the stock using Bloomberg Finance data cited in its report. The company’s 12-month forward price-to-earnings ratio stands at 29.1x, which the broker pointed out is a 99% premium to Prysmian’s 10-year average P/E of 14.6x and a 75% premium to its five-year average of 16.6x.
Management commentary from Prysmian’s first-quarter results, according to the broker, indicates optical fiber prices have more than doubled in the past six months. J.P. Morgan’s own channel checks suggest prices have continued to climb since then, with the largest increases concentrated in higher-quality fibers typically deployed in data centers.
The firm quantified the potential impact of further price moves on the Digital Solutions business, noting that every 10% increase in Prysmian’s optical fiber cable pricing would raise Digital Solutions’ organic growth by roughly 6%. The analysts added that the effect on EBITDA may be disproportionately large because Prysmian’s vertical integration can amplify margin expansion.
J.P. Morgan’s adjusted EBITDA estimate for the group in 2026 is €2.80 billion. The broker emphasized that this figure does not incorporate any significant contribution from the exceptional optical fiber prices observed recently.
Relative to consensus, J.P. Morgan said its forecasts are 4% and 9% ahead of street adjusted EBITDA for 2027 and 2028 respectively, while aligning with the 2026 consensus. The broker interpreted this as evidence that potential upside to Digital Solutions’ H2 performance is not yet fully reflected in market estimates.
Depending on how rapidly the pricing windfall materializes, J.P. Morgan suggested the Digital Solutions segment could reach the lower boundary of Prysmian’s 2028 medium-term adjusted EBITDA target of €2.95 billion as early as 2026.
In a base case scenario, the analysts see an adjusted EBITDA opportunity for Digital Solutions of between €900 million and €1 billion by 2030, compared with €268 million in 2025. This projection assumes average optical fiber cable pricing in 2030 runs 65% to 75% above 2025 levels, and the broker forecasts normalised EBITDA margins of 26% for the segment in 2030.
Capacity dynamics underpin the near-term pricing outlook, according to J.P. Morgan. Channel checks indicate that bringing preform capacity online typically requires about 18 to 24 months, a lead time that supports the view elevated pricing is likely to remain through 2026 and into 2027.
The broker cited CRU data referenced via Sterlite Technologies’ April results, which project an 11% compound annual growth rate in optical fiber volumes for Europe and North America through 2030 - rising to 329 million fiber kilometers from 191 million in 2025.
Prysmian has planned a substantial lift in optical fiber cable production, targeting a 40% to 50% increase in capacity, with new output expected online in two to three years and directed almost entirely to North America, J.P. Morgan reported. Management has previously indicated a $5.00 billion revenue potential through framework agreements that would facilitate that expansion.
J.P. Morgan identified two near-term triggers that underpin the Catalyst Watch placement: a formal announcement of U.S. capacity expansion and the possibility of a guidance upgrade when Prysmian releases half-year results on July 30.
Context and implications
The broker’s analysis centers on the Digital Solutions unit as the primary beneficiary of higher fiber pricing and constrained supply. While the shares have pulled back since J.P. Morgan’s deep dive, the firm’s estimates imply material upside to margins and EBITDA if current pricing trajectories continue and capacity additions are phased as expected.