JP Morgan indicated that the French automotive supplier could benefit from the rollout of artificial intelligence through its battery cooling solutions for data centers.
The analysis reveals that Valeo is actively seeking opportunities in data centers and battery energy storage systems. JP Morgan noted that the group has secured a 225 million dollar contract, its first in battery energy storage systems (BESS), a project that requires no additional capital expenditure.
JP Morgan also pointed out that the company intends to diversify by exploring opportunities in the defense sector, ramping up the assembly of drones equipped with electric motors.
Regarding its automotive business, JP Morgan described it as 'resilient', notably because the rise in raw material costs has been largely passed on to customers.
JP Morgan maintains an overweight rating with a price target of 22 euros.
Jefferies echoes the sentiment
According to the American investment bank, 'the growth potential stemming from opportunities in energy and thermal management (BESS and data centers) is gaining traction and could begin to become a genuine growth driver for Valeo'.
The broker explained that this could lead to further rerating potential, despite the stock's significant outperformance since the start of the year (+20.80% excluding today's rally).
Jefferies anticipates a more resilient second quarter before a pivot toward growth expected for the 2027 fiscal year. The recommendation remains at hold with a price target raised to 13.20 euros, up from 10.60 euros previously.
Valeo is a world leader in the design, manufacture, and marketing of automotive equipment. 2025 net sales break down by market as follows:
- POWER Division (50.3%): thermal management systems and propulsion systems for the electrification market for hybrid and electric vehicles (automated and hybrid transmission systems, battery thermal management, cabin thermal management, etc.);
- LIGHT Division (25.9%): technologies that improve vehicle visibility for drivers and other road users (innovative and intelligent exterior and interior lighting systems, window, windshield, and rear window wiping systems, and sensor cleaning systems);
- BRAIN Division (23.7%): driver assistance and interior experience solutions that are part of the transformation towards the software-defined vehicle (sensors, software and hardware systems including high-performance computing units, interior systems for driver monitoring and on-board improvement);
- other (0.1%).
Each of Valeo's Divisions has an activity in the replacement market, which represents, at the group level, 10.2% of net sales.
Net sales (including intragroup) are distributed geographically as follows: France (14.5%), Germany (10.9%), Europe and Africa (25.9%), the United States and Mexico (18.1%), the Americas (0.9%), China (15.9%) and Asia (13.8%).
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