Berenberg continues to view European cable producers as strategically positioned to benefit from multiple long-term demand drivers, but the broker warns that investor selectivity is becoming more important as market valuations diverge and medium-term expectations are being recalibrated.
In a note circulated to clients, analysts Scott Humphreys and Richard Dawson describe cable manufacturers as being "in an enviable position," receiving direct support from the expansion of data centres as well as broader structural forces - including electrification, the transition to renewable energy and a broad uptick in grid investment. They say the sector’s outlook has improved into 2025, yet the risk/reward profile is now significantly different across individual companies.
Reflecting that assessment, Berenberg reiterated a Buy rating on Nexans, downgraded Prysmian to Hold following recent share-price outperformance, and kept NKT at Hold.
Nexans: Berenberg’s preferred exposure
The brokerage identifies Nexans as its top pick. Analysts argue the stock trades at what they view as an "increasingly unjustifiable discount to its peers." They cite management changes, a streamlined portfolio and the prospect of clarity on the Great Sea Interconnector (GSI) as reasons for a potentially improved investor outlook heading into 2026. The note points to two specific events that have influenced sentiment: a rumour-driven sell-off on 9 December 2025 and a rescheduling confirmation on 6 January 2026. Humphreys and Dawson say those moves appear to have removed much of the immediate investor nervousness and they expect the share price to more closely reflect earnings going forward.
Prysmian: Room for upside constrained
On Prysmian, the analysts contend the company is "passing peak supremacy." They note that recent rerating of the shares and ambitious medium-term consensus expectations leave limited upside potential. The note also argues that Nexans’ ongoing portfolio reshaping and NKT’s capacity additions are likely to narrow Prysmian’s advantage on key financial metrics. Berenberg additionally highlights Prysmian’s greater direct exposure to the U.S. market and to data-centre demand as a factor that could make its share price more volatile, leading the analysts to conclude there is a better risk/reward trade-off in other names.
NKT: Long-term exposure with near-term cash risk
For NKT, the brokerage points to an attractive, acyclical link to long-term grid spending. However, it cautions that organic revenue declines and expected free cash outflows in 2026 could obscure the longer-term equity case, tempering Berenberg’s enthusiasm.
Sector backdrop
Berenberg highlights several demand-side developments that have improved the sector outlook: rising expectations for AI-related capital expenditure, firmer forecasts for electricity demand, fresh government stimulus in the U.S. and Germany, and renewed optimism for European renewables. The firm says these factors underpin continued strong demand for electrical equipment into the next decade.
Analytical takeaway
While the brokerage remains constructive on the group as a whole, its latest positioning reflects a shift toward differentiation across names. Investors are urged to weigh company-specific exposures, valuation divergences and near-term cash dynamics when choosing positions within the cable sector.