This analyst just raised his price target on Hammond Power Solutions

National Bank Financial analyst Baltej Sidhu says Hammond Power Solutions’ (Hammond Power Solutions Stock Quote, Chart, News, Analysts, Financials TSX:HPS.A) growth profile remains supported by energy transition and electrification demand, with data centres continuing to drive the story.

As reported by the Globe and Mail, In a June 9 report, Sidhu maintained his “Outperform” rating and raised his target on Hammond to $355.00 from $325.00. The average target is $360.60.

“Underlying demand drivers of the broader energy transition and electrification thematic support the durability of Hammond Power Solutions’s growth profile, underlying profitability and our investment thesis,” Sidhu said.

Sidhu said he came away from recent investor meetings with management in Europe with several consistent messages: demand visibility remains strong, capacity is again becoming a strategic constraint and the pending acquisition of AEG Power Solutions should broaden Hammond’s growth beyond dry-type transformers.

Management also highlighted growing opportunities outside North America, particularly in Europe, where electrification spending and grid modernization initiatives continue to support demand, he said.

Sidhu said the question is no longer whether Hammond needs more capacity, but where and how much. He said Monterrey 4 and reconfiguration across Monterrey 3 and 4 should support about $1.2-billion of revenue capacity in 2026, with existing real estate potentially adding another $50-million to $100-million.

Beyond that, Sidhu said a greenfield decision is increasingly likely, with a new facility requiring 18 to 24 months to build.

Data centres remain the primary growth engine. Sidhu said the category has increased from 10% of revenue three years ago to 30% exiting 2025, with the backlog share above 30% to 40%. Typical data centre awards are now $10-million to $20-million.

“In our view, this reinforces HPS’ differentiation in custom dry-type transformers, where schedule, integrity, engineering support, and quality matter more than price,” he said.

Sidhu also said Hammond’s $365-million acquisition of AEG Power Solutions should extend its growth runway. Management continues to expect the deal to close in the second quarter of 2026, subject to regulatory approvals.

“We continue to view AEG as an underappreciated strategic platform, expanding HPS into UPS, power electronics, services and AC/DC power quality solutions,” he said.

Sidhu said tariffs create some margin timing pressure, particularly on standard products, but Hammond has moved on pricing and larger custom contracts often include tariff protection. He said solid-state transformers and 800 VDC data centre architecture remain longer-term items to monitor, but current economics appear narrow and niche.

“We view AEG as giving HPS building blocks that turn emerging AC/DC architectures into option value,” he said.

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