Buying into Prysmian: the market is banking on a strong quarter

(Il Sole 24 Ore Radiocor) - A flood of positive reviews for Prysmian as it rises on the Milan Stock Exchange (FTSE MIB ) following a pre-earnings conference call with analysts ahead of the second-quarter results due on 30 July.

Barclays analysts have raised their target price to 161 from 147 euros, noting that “underlying demand trends remain solid in the Grid, Transmission and fibre-optic businesses. The focus is clearly on the latter segment, in view of the pass-through of price increases to revenues and the possible announcement of major contracts with hyperscalers, which we expect to be announced ahead of the second-quarter results. We expect an upward revision to full-year guidance and confirm our ‘Overweight’ rating’. The investment firm places particular emphasis on the Digital Solutions division, “with the expectation that Prysmian will announce its first major contract to supply fibre optics to a hyperscaler. We forecast that such agreements could have a total value of around 5 billion dollars in the long term and believe they represent a key factor in a revaluation of the share price on the stock market.”

Meanwhile, experts point out that for the ‘second quarter, we believe Digital Solutions is likely to continue to record sustained growth (we estimate organic growth of 15 per cent) and a margin expansion of around 50 basis points compared with the previous quarter. This is thanks to the significant imbalance between supply and demand, which continues to support prices, and the gradual reallocation of the fibre-optic business (which accounts for around 60 per cent of Digital Solutions’ sales) towards data centre customers, who are more profitable than traditional, lower-margin segments’. For Barclays, however, this is not the only positive aspect: “Demand in the power grid business (Power Grids) is in fact expected to remain robust, and we forecast a sequential improvement in the division’s margins, thanks to the gradual pass-through of price increases to the income statement.” Meanwhile, “for the Transmission division, we expect the usual seasonal increase in activity and the maintenance of high margins, with a further improvement compared with the first quarter. More generally, we believe the outlook for the Electrification division remains unchanged: strong demand from data centres continues to offset the weakness in the construction market.”

From a strictly financial perspective ‘we expect a very solid quarter, enough to prompt management to raise its guidance on adjusted EBITDA for 2026, taking it from €2.625–2.775 billion to €2.8–2.95 billion. The midpoint of the new range would therefore be around 2.5 per cent higher than current consensus estimates.” Analysts have “revised our adjusted EBITDA estimates for the 2026–2028 period upwards by 1–2 per cent, mainly to reflect stronger demand and better price trends in the Digital Solutions division. Furthermore, given the increasing strength and visibility of Prysmian’s earnings profile, we are raising the premium applied to the 2027E sector EV/EBITDA multiple (13x) from 20% to 30%.” In summary, estimates forecast second-quarter revenue 7 per cent higher than the consensus, and adjusted EBITDA 5 per cent higher than the consensus.

According to Akros Bank, “our estimate for EBITDA in the second quarter of 2026 is around 2 per cent lower than the current Visible Alpha consensus. We expect Prysmian to have recorded revenue growth of around 17% in the second quarter’, driven by organic growth of around 5%; a positive contribution of around 9% from higher metal prices; uan impact of around 3% from acquisitions (M&A) and a largely neutral currency effect. “We believe the Digital Solutions division will be the main driver of growth, thanks both to the contribution from the acquisition of Channell and to the reallocation of fibre-optic production capacity from broadband customers to large data centre operators (hyperscalers). This should translate into higher selling prices and greater long-term business visibility.” Experts note that the company is also in talks to finalise a number of pre-commitment framework agreements with data centre operators, “the total value of which could reach around $5 billion. Some updates on these agreements could be announced even before the publication of the second-quarter results.” “Solid growth” is also expected for the Transmission division, “with margins in line with those of the first quarter, in the region of 19–20 per cent. We also believe that the Power Grids division has regained some of its profitability thanks to the stabilisation of copper prices during the quarter and the passing on of previous cost increases to end customers. The Electrification division is also expected to have benefited from strong demand from data centres, offsetting the persistent weakness in the residential market. On the tariffs front, the company stated during a pre-quarter-end conference call with analysts that these had not had a significant impact on the business.”