Goldman Sachs reiterates Buy(on CL) on Schneider Electric, raising the 12-month target price to €321

Overview

This report is Goldman Sachs' company update on Schneider Electric (SCHN.PA) heading into the second quarter of 2026. Goldman Sachs reiterates its Buy(on CL) rating and raises the 12-month target price from €316 to €321. The report's core basis includes upward revisions to expectations for data center and utility capex, sequential improvement in the general industrial barometer, higher growth expectations for industrial automation, and Schneider's relative competitive advantages in data centers, medium-/low-voltage electrical equipment, and liquid-cooling-related products.

Core views

Goldman Sachs believes Schneider remains one of the fastest-growing companies in its coverage for 2026-2029E. Its 2026/27E sales and adj. EBITA forecasts are both above Visible Alpha consensus, while the valuation framework shows it trading in the lower end of its ten-year multiple range relative to direct peers and below the global electrical sector trendline under the EV/IC vs. ROIC/WACC framework, leaving the risk-reward attractive.

Analysis framework

The report uses the Multi-Industry Toolkit, combining the barometer, industry screening, capex tracker, bottom-up end-market growth estimates, peer valuation comparisons, and the EV/IC vs. ROIC/WACC framework to assess whether Schneider's growth, margins, ROIC, and valuation premium are aligned.

Methodology notes

• Multi-industry stock selection frameworkMulti-Industry Toolkit

  Systematically analyze multi-industry stocks using barometers, screeners, and capex trackers.

  Goldman Sachs incorporates multiple data sources, including data centers, utilities, general industry, China, and pricing indicators, into company forecasts to judge short-term order and revenue momentum.

• Valuation frameworkEV/IC vs. ROIC/WACC

  Use invested capital multiples versus return spreads over cost of capital to measure relative valuation.

  The target price is based on the sector-relative EV/IC and ROIC/WACC framework, using 9m27/3m28 estimates.

• Growth estimationEnd-market weighted bottom-up growth estimates

  Validate company organic growth forecasts by weighting end-market exposures.

  Goldman Sachs uses implied end-market growth to cross-check Schneider's 2025-2029E organic sales CAGR, viewing data centers, grid, utilities, and industrial automation as key drivers.

• Capex trackingGS Datacenter Capex Tracker

  Track capex of data-center-related companies to gauge demand strength.

  The report mentions about €695bn of data center capex in 2026 across 63 companies, and notes significant upward revisions in recent updates.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Schneider Electric (SCHN.PA)

  Research target and core buy thesis

  Strengths

  Broad end-to-end electrical product portfolio, prominent exposure to data centers, medium-voltage electrical equipment, and liquid cooling, with expected 2025-2029E organic sales and EPS growth leading covered peers.

  Weaknesses

  Part of growth depends on the cycle in data centers and industrial automation, while the low-voltage business is affected by the European construction cycle.

  Comparison

  The report says it is trading in the lower end of its ten-year multiple range relative to direct peers, and below the global electrical sector EV/IC versus ROIC/WACC trendline.

  Risks

  Data center growth weaker than peers, slow recovery in European construction, pressure in Chinese industrial automation, ROIC-dilutive M&A, and short-term weakness in India.

• ABB / Siemens / Legrand / Eaton / Vertiv / Hubbell / nVent / Johnson Controls International

  Peers for valuation and competitive landscape comparison

  Strengths

  Peers are used to compare positioning and valuation premiums in data center equipment, low-voltage, and medium-voltage equipment markets.

  Weaknesses

  Some peers may be less complete than Schneider in specific product portfolios or end-to-end data center coverage.

  Comparison

  Goldman Sachs believes Schneider is not expensive versus direct peers such as ABB, Siemens, and Legrand, and has stronger growth-screen characteristics.

  Risks

  If peers gain share faster in data center equipment or medium-voltage markets, Schneider's relative premium could come under pressure.

• Data center, medium-voltage and low-voltage electrical equipment

  Main growth exposures and industry drivers

  Strengths

  Upward revisions to data center capex, utility grid spending, and demand for medium-voltage equipment support medium-term growth.

  Weaknesses

  Demand is sensitive to large capex cycles and order timing in end markets.

  Comparison

  The report emphasizes Schneider's more complete end-to-end product portfolio relative to peers, along with meaningful liquid-cooling exposure within European coverage.

  Risks

  A slowdown in data center capex, weaker pricing trends, or project delays could weigh on growth delivery.

Key data

• RatingBuy(on CL)The rating has been maintained since 2025-03-13.
• 12-month target price€321Previously €316, raised due to higher earnings forecasts.
• 2026/27E adj. EBITA forecast revision+2% / +1%Reflects capex tracker updates and improvement in the 2Q26 barometer.
• Sales forecast versus Visible Alpha consensus2026E +2%, 2027E +5%Goldman Sachs' sales forecasts are above consensus.
• adj. EBITA forecast versus Visible Alpha consensus2026E +3%, 2027E +7%Goldman Sachs' earnings forecasts are above consensus.
• Expected FY26 OSG guidance9%-12%Goldman Sachs expects it may be raised from 7%-10% in 1H.
• 2025-2029E organic sales CAGRabout 11%Goldman Sachs believes Schneider is in the top quartile of Multi-Industry coverage.
• Data center capex tracker63 companies, about €695bn capex in 2026Upward revisions to data center capex are an important source of estimate upgrades.
• 2025 global data center equipment market sizeabout €64bnUsed for analyzing the competitive landscape in data center equipment.
• Market capitalization€160.0bn / $182.9bnDisclosed in the report's Key Data.
• Enterprise value€170.5bn / $194.9bnDisclosed in the report's Key Data.
• 3-month ADTV€271.5mn / $315.8mnDisclosed in the report's Key Data.

Impact & implications

If Goldman Sachs' view plays out, Schneider will continue to benefit from data center buildout, grid and medium-voltage equipment demand, improvement in industrial automation, and high-growth areas such as liquid cooling. Earnings upgrades and potential guidance increases could support valuation re-rating; however, the investment thesis would weaken if data center growth lags peers, the European construction recovery is delayed, Chinese industrial automation remains under pressure, or acquisitions dilute ROIC.

Risks

• Data center growth weaker than key peers.
• The European construction market recovers more slowly than expected, delaying growth in the Low Voltage business.
• The China market puts pressure on Industrial Automation.
• M&A dilutes ROIC.
• Short-term weakness in the India market.

What to watch

• 2Q26 results and management commentary on Industrial Automation.
• Whether FY26 OSG guidance is raised from 7%-10% to 9%-12% in 1H.
• Whether the GS Datacenter Capex Tracker continues to be revised upward.
• The sustainability of utility grid spending and demand for medium-voltage equipment.
• PPI pricing trends for electrical equipment in the US and Europe.
• Whether the general industrial and China barometers remain above historical medians.
• Schneider's valuation multiples relative to direct peers and its position on EV/IC vs. ROIC/WACC.