Key insights
- Morgan Stanley upgraded Belimo, citing a significant growth catalyst from data center cooling, driven by AI and the shift to liquid cooling. The brokerage raised its FY25 data center revenue estimates and U.S. hyperscaler cloud capex forecasts, suggesting a structural shift benefiting Belimo's higher-value products. This upgrade, coupled with potential for shorter replacement cycles, implies positive momentum for the company and related infrastructure spending, potentially influencing broader industrial and technology sectors.
Investing.com -- Belimo Holding AG’s shares jumped 8% on Monday after Morgan Stanley upgraded the Swiss valve maker to “overweight” from “equal-weight” and raised its price target to CHF1,100 from CHF860, citing a structural shift in data center cooling as the primary growth catalyst.
The brokerage said data centers accounted for 17% of Belimo’s CHF1.12 billion in sales in 2025, up from 11% in 2024, and drove roughly 50% of group growth.
Morgan Stanley estimates data center revenue grew more than 70% year-on-year in 2025 and expects the segment to account for more than 50% of group growth for at least the next three years, reaching 38% of revenues by 2030.
Morgan Stanley projects Belimo’s revenue will rise to CHF1.31 billion in fiscal 2026, CHF1.53 billion in 2027 and CHF1.78 billion in 2028, with earnings per share of CHF18.33, CHF22.42 and CHF26.20 respectively.
The brokerage’s estimates run 2% above consensus for 2026, widening to 9% by 2028 and 20% by 2030.
The upgrade rests on three drivers. First, Morgan Stanley revised its U.S. hyperscaler cloud capital expenditure forecast up 7% for 2026 and 18% for 2027 following first-quarter results, projecting 82% year-on-year growth in 2026 to $815 billion and 38% growth in 2027 to $1.13 trillion.
Second, the shift from air cooling to liquid cooling in AI data centers moves demand toward Belimo’s higher-value products.
An Energy Valve carries a price of roughly $1,200, against a group average selling price closer to $130 to $150.
Control valves grew 31.3% in local currency in fiscal 2025, well ahead of damper actuators at 14.4%.
Third, replacement cycles in data centers, typically 25 years or more in commercial buildings, could compress to five to seven years as server refreshes drive re-specification of field devices.
“In the general grayscale gray part of the data center, we have our normal market share, which is probably around 20 to 25%. And then if it comes really to the high end part on the cooling side — on the Energy Valve that is required to cool directly the chip — we have got an almost dominant market share," Belimo management said on its 2025 results call, as cited by the broker.
The stock trades at 47.7 times Morgan Stanley’s 2026 earnings estimate. The brokerage said that on a growth-adjusted basis, dividing the forward EV/EBIT multiple by the EBIT compound annual growth rate, Belimo screens are cheaper than ABB, Siemens, Halma and IMI.
Morgan Stanley set a bull case of CHF1,510 and a bear case of CHF600. The broker said the principal downside risk is a change in data center architecture that could seal more liquid-cooling components inside coolant distribution units, reducing Belimo’s standalone specification power.
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