Barclays raises ACS rating due to valuation gap in data center platform

Investing.com - Barclays Capital Inc. upgraded the rating of Spain’s ACS Group, also known as ACS Actividades de Construccion y Servicios SA (BME:ACS), from Equal Weight to Overweight on Monday, and raised the target price from €78 to €127, citing a valuation disconnect in the company’s data center development platform.

The firm also increased the target price for Hochtief AG (HOTG.DE) from €280 to €419, while maintaining an Equal Weight rating.

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This upgrade reflects Barclays’ view that among European contractors, Spain’s ACS Group offers the most direct exposure to data center growth. Although its initial 1.7GW pipeline for its own data center platform is valued at around €3 billion, the market currently assigns almost zero valuation to the company.

Spain’s ACS Group has formed a 50-50 joint venture with GIP (Blackstone) to develop 3GW of data center capacity by 2030. The initial portfolio has secured land and 80% of the power supply at sites in Spain, the US, and Australia.

Research indicates that driven by commitments from hyperscale cloud providers and investments in AI infrastructure, data center capacity is expected to grow at over 20% annually by 2030.

Europe currently has 9.5GW of installed capacity, while the US has 26.5GW. From 2026 onward, approximately 8.5GW of European capacity is expected to enter construction.

Barclays estimates that contractors and power infrastructure providers will be the main beneficiaries, as data center construction mainly focuses on electrical systems and HVAC rather than traditional building materials.

Spain’s ACS Group’s data center business comprises three main pillars: engineering and construction through its 79%-owned Hochtief, direct ownership of large data centers via the GIP joint venture, and cloud services through Edge Data Centers.

The company expects its data center business to reach an equity valuation of over €25 billion by 2030, with the first lease at its Madrid I facility expected to be announced in the first half of 2026.

Barclays has raised earnings forecasts for two companies, reflecting higher predictions for Turner and the infrastructure division, and has included a valuation of approximately €3 billion for the Digital & Energy platform within the ACS Group’s segment valuation analysis.

For Hochtief, data centers currently account for 37% of Turner’s order volume. Management has set a target profit margin of 5-6% for large data center projects, compared to Turner’s current margin of about 2.5%.

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