Schneider: Structural Growth Supports Impressive 5% Organic Revenue Growth; Raising Our Fair Value

Wide-moat Schneider Electric delivered impressive 5% organic revenue growth during the first quarter, reaffirming the group’s long-term structural growth drivers. Its outperformance against company-compiled consensus and its peer ABB, which reported earnings on April 18, can be attributable to its systems business, which grew by double digits due to strong growth from its data center and infrastructure end markets. We view Schneider as an enabler of several structural megatrends, such as the necessary upgrade of grid infrastructure to support decarbonization initiatives as well as investment into artificial intelligence, underpinning its robust top-line outlook and the increase in our fair value estimate to EUR 195 from EUR 174. Shares are trading at a 9% premium to our revised fair value estimate.