Jefferies has moved ACS Actividades de Construccion y Servicios SA from a Hold to a Buy rating and raised its price objective sharply to EUR116.00 from EUR53.10. The brokerage cited growing visibility on potential upside tied to ACS's secured asset pipelines, notably its data center portfolio and expanding prospects in US Express Lane development.
The upgrade follows a period of strong market performance for ACS shares. The stock has risen 130.54% over the past year and 53.13% over the last six months, underscoring recent investor enthusiasm.
According to InvestingPro data referenced in the analysis, ACS operates with a moderate level of debt and carries a "GREAT" overall financial health score. Jefferies frames those metrics as potentially supportive of the company’s ability to pursue an ambitious investment agenda across multiple asset classes.
Graham Hunt, the Jefferies analyst who authored the note, described a change in the firm’s view of ACS. Previously, Jefferies had favored Hochtief over ACS, preferring Hochtief’s more cash-generative, "pick and shovel" profile relative to ACS’s heavier-weight, greenfield project approach. Hunt said that with multiple pipelines now in place, the firm sees stronger visibility on upside from ACS’s investments.
In its assessment, Jefferies places a valuation on ACS of 12 times 2026 EBIT and derives an implied stub value of roughly EUR4 billion. Based on those metrics, the firm concluded that ACS shares appear to be undervalued at current levels.
Separately, Deutsche Bank has initiated coverage on ACS with a Hold rating and a price target of EUR86.70. That initiation arrives as ACS gains recognition for its role in constructing data centers. Deutsche Bank’s stance is neutral in light of the company’s growth prospects in the sector.
Management at ACS projects a marked increase in AI data center capacity, forecasting capacity to expand to 15 times 2024 levels by 2035. The company has characterized that expansion as implying a compound annual growth rate in excess of 20% on a medium-term basis.
Investors now have two broker views on the stock: Jefferies upgraded to Buy and sharply increased its target amid perceived upside from secured pipelines, while Deutsche Bank has taken a more measured approach with an initial Hold and a lower target. The differing valuations and ratings highlight contrasting assessments of execution risk, capital intensity and the runway for data center-related investments.
Key points
- Jefferies upgraded ACS to Buy and raised its price target to EUR116.00 from EUR53.10, citing clearer upside from data center and US Express Lane pipelines.
- ACS shares have climbed 130.54% over the past year and 53.13% in the last six months; InvestingPro notes moderate debt and a "GREAT" financial health score.
- Deutsche Bank initiated coverage with a Hold rating and a EUR86.70 target; ACS management forecasts AI data center capacity reaching 15 times 2024 levels by 2035, implying a CAGR above 20%.
Risks and uncertainties
- Execution risk on capital-intensive greenfield projects could affect returns and timing of expected upside - relevant to construction and infrastructure sectors.
- Valuation assumptions such as 12 times 2026 EBIT and the implied EUR4 billion stub value may not materialize if market or operational conditions change - relevant to equity investors and debt markets.
- Differences in broker assessments, such as Jefferies' Buy versus Deutsche Bank's Hold, indicate uncertainty over the pace and scale of data center demand and project realization - relevant to technology infrastructure and construction markets.