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On Thursday, Citi analyst Vivek Midha adjusted the price target for Siemens Energy AG (ETR:ENR1n) (ENR:GR) (OTC: SMEGF), increasing it to €60 from €58 while maintaining a Neutral rating on the stock. Midha updated his model to reflect new information following the company’s fiscal first quarter of 2025 results, which revealed that Siemens (ETR:SIEGn) Energy’s Gas Services reservations of 20 gigawatts (GW) had significantly exceeded expectations.
Despite the impressive reservations, the analyst noted that the incremental capacity from these reservations would take time to become operational. As a result, he expects the ramp-up and potential divisional earnings growth to be gradual, extending until 2030. Midha pointed out that net working capital was a key factor in driving the company’s strong cash flow performance.
The conversion of Siemens Energy’s robust pipeline is anticipated to continue supporting solid cash flow in the short to medium term. However, Midha cautioned that the extended net working capital position could make future cash generation vulnerable if there is a downturn in demand.
The analyst acknowledged the positive developments in the Gas and Grid divisions but emphasized the necessity for effective execution in both the ramp-up of these divisions and the company’s turnaround efforts. He believes that successful execution is required to drive further share price growth.
In his closing remarks, Midha stated, "We raise our TP to €60 but leave our rating unchanged," signaling confidence in Siemens Energy’s potential for steady financial performance while also recognizing the challenges ahead for the company to achieve further gains in its share price.
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