TECHNOLOGY Excessive relative derating for Schneider and Somfy
As a summary of the 1Q22 publications of our industrial coverage, we believe Schneider features the best fundamentals given (i) its strong industry automation focus, (ii) a product portfolio resolutely focused on sustainability and resource frugality in a context of tense supply chains, and (iii) its diversified geographical exposure. Schneider’s valuation, at par with building-focused players, is in our view not justified given its better fundamentals. Regarding Legrand and Somfy, players almost exclusively addressing the building sector, we believe Somfy’s valuation discount over Legrand is not justified, as the group’s growth lean on structurally deeper drivers and margins prove as resilient as Legrand. We Reiterate our ratings for the 3 companies.• Schneider’s higher fundamentals on both short and long-term.
• Strong inflation pressures on margins, but stronger pricing power
• Schneider and Somfy strong relative derating represents a buying opportunity.
Recommendations left unchanged after revising our estimates. While our new Target Prices reflect change in estimates, we maintain our BUY rating for Schneider (EUR155 vs 165 previously).
We also reiterate our BUY rating for Somfy (EUR155 vs 170) as well as our NEUTRAL stance for Legrand (EUR85 vs 90).
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