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Redburn-Atlantic upgrades Siemens Energy stock on market position reassessment

EditorEmilio Ghigini
Published 07/02/2024, 04:12 PM
ENR1n
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On Tuesday, Siemens Energy AG (ENR:GR) (OTC: SMEGF) stock received an upgrade in its rating from Neutral to Buy by Redburn-Atlantic, accompanied by a significant increase in its price target to EUR42.00, up from EUR12.80.

The firm's decision is based on the reassessment of Siemens Energy's market position relative to its competitors and an optimistic outlook on the company's financial performance.

The upgrade reflects the belief that Siemens Energy, despite its challenges, particularly in the onshore turbine business, is undervalued when compared to its peer, GE Vernova. Redburn-Atlantic points out that the quality of Siemens Energy's exposures is similar to that of GE Vernova, but its equity is more affordable, which presents an opportunity for the valuation gap to narrow.

Redburn-Atlantic has increased its group EBIT estimates for Siemens Energy by over 25% for the fiscal years 2024-2030, with projections that are 26% higher than the consensus for fiscal year 2026.

This revision suggests a stronger balance sheet for Siemens Energy and reduces the likelihood of the need for new equity, even if additional issues arise within its wind business.

The analyst from Redburn-Atlantic has expressed confidence in Siemens Energy's potential for valuation improvement, stating, "The risk of new equity is much less, even if further problems emerge in the wind business, which should allow the company's valuation gap to GE Vernova to close gradually."

Investors have been provided with a new price target of EUR42.00 for Siemens Energy shares, marking a substantial increase from the previous target of EUR12.80. This new target reflects the analyst's revised expectations for the company's earnings and balance sheet strength.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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