Prysmian is on a roll, buoyed by the tech sector and its deal with Molex; Jefferies sets a target price of 180 euros

(Il Sole 24 Ore Radiocor) - Shares in Prysmian on the Milan Stock Exchange, buoyed by a series of positive analyst ratings. The cable manufacturer’s share price rose by more than three points, in a FTSE MIB which is trading cautiously higher. On 20 July, the group announced the long-awaited long-term supply agreement for fibre and optical cables with Molex, an agreement worth up to €5.5 billion over ten years, in addition to a further volume of agreements and commercial initiatives with hyperscalers and data centre infrastructure providers totalling over €4.5 billion, which are expected to be formalised shortly. Overall, Prysmian therefore has visibility on demand exceeding €10 billion by 2035, with annual revenue of up to €1.1 billion from 2031 onwards.

“We regard this agreement as an important first step, with further deals with hyperscalers that we believe are likely, whilst Prysmian aims to increase its exposure to the rapid adoption of optical connectivity in scale-out and scale-up architectures”, comment analysts at Deutsche Bank, who have a ‘Buy’ rating on the stock and a target price of 167 euros. According to experts at Jefferies, the partnership with Molex is “highly synergistic, as it enables the company to offer a comprehensive solution for the so-called ‘white space’ in data centres”. Analysts at the New York-based bank also estimate “cumulative investment of around €5 billion over the period 2026–2030, peaking by 2029 and then declining”. Conversely, cumulative free cash flow over the same period is estimated at up to €10 billion, “with a payback period of around four years, thanks to increased production capacity and higher margins”.

Prysmian’s expansion plan reinforces Jefferies’ conviction regarding the Digital Solutions division’s potential for growth and margin expansion in the medium term. Jefferies has therefore raised its target price to 180 euros from the previous 178 and confirms its ‘Buy’ rating. “Although the topic of artificial intelligence is currently subject to doubts regarding the sustainability of hyperscalers’ capital expenditure (capex) and their return on investment (ROI), we continue to see significant commitments from major operators, high visibility for suppliers and a supply shortage that supports both growth and margins”, the experts conclude.

And renewed confidence in artificial intelligence first fuelled a rebound in Asian markets, with South Korea’s Kospi – having lost over 4 per cent in the previous session – closing up 3.6 per cent, followed by European tech stocks. In fact, STMicroelectronics in Milan gained over two points, as did Infineon Technologies in Frankfurt, whilst in Amsterdam, Be Semiconductor leads the market with a gain of +3.1%, followed by ASML and ASM (+1.7%).