On Thursday, Citi updated its outlook on Siemens Energy AG (ETR:ENR1n) (ENR:GR) (OTC: SMEGF), increasing the price target to EUR48.00 from the previous EUR40.00. The firm maintained a Neutral rating on the stock.
The adjustment follows Siemens (ETR:SIEGn) Energy's demonstration of strong order intake and solid guidance, which highlight the positive structural drivers expected to support the company's performance in the medium to long term.
Siemens Energy's new fiscal year 2028 targets are based on what appears to be realistic assumptions. However, the analyst noted that there is still a significant journey ahead for the company, with substantial improvements anticipated for its subsidiary Siemens Gamesa Renewable Energy (OTC:GCTAY) (SGRE) by fiscal year 2026.
Despite the valuation looking attractive compared to its peer GE Vernova, the 12 times 2026 estimated EV/EBITA (enterprise value to earnings before interest, taxes, and amortization) ratio for Siemens Energy is seen as not being out of the ordinary.
The analyst's commentary highlighted that while the outlook for Siemens Energy is promising, the risk/reward profile is considered relatively balanced, with the main upside risk to earnings coming from the Gas sector.
Adjustments were made to earnings forecasts, with a decrease for SGRE due to a more gradual growth strategy and for the Gas sector because of supply constraints.
On the flip side, earnings forecasts were raised for the Grid and the Transformation of Industry sectors. Consequently, the fiscal year 2028 earnings per share (EPS) estimate was increased by 11%, of which 2% is attributed to foreign exchange impacts. This revision reflects a nuanced view of the company's prospects, taking into account both the potential challenges and areas of growth.
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