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On Monday, Deutsche Bank (ETR:DBKGn) analysts adjusted their stance on Siemens AG (SIE:GR) (OTC: OTC:SIEGY (BCBA:SIEGYm)), downgrading the stock from Buy to Hold while maintaining a price target of €240.00. The industrial conglomerate, with a market capitalization of $193 billion and strong financial health according to InvestingPro metrics, has seen its stock rise 30% year-to-date, outperforming its industry counterparts ABB (ST:ABB) and Schneider, which have remained relatively unchanged.
The upgrade in Siemens (ETR:SIEGn) shares has been attributed to several factors, including a notable increase in automation orders during fiscal Q1, which saw a 25% quarter-over-quarter growth. The company’s strong operational performance is reflected in its healthy 39% gross profit margin and $10.5 billion in levered free cash flow. Additionally, the stock has been buoyed by the announcement of a significant €500 billion infrastructure program in Germany and speculative discussions regarding adjustments to Siemens’ relationship with its subsidiary Siemens Healthineers (SHL).
Deutsche Bank’s analysis centered on the potential scenarios for Siemens to divest its stake in Healthineers. The review highlighted that the paths to exit are complex and examined the potential consequences for Siemens’ other business segments, particularly its financing division, Siemens Financial Services (SFS).
Concluding their assessment, Deutsche Bank indicated that the potential advantages of deconsolidating Healthineers are likely already reflected in Siemens’ current stock price. With Siemens trading at a P/E ratio of 18.6x and EV/EBITDA of 18.9x, the stock appears overvalued according to InvestingPro Fair Value calculations. The company maintains a strong dividend track record, having paid dividends for 34 consecutive years with increases in the last four years. For deeper insights into Siemens’ valuation and 10+ additional ProTips, access the comprehensive Pro Research Report available on InvestingPro.
In other recent news, Siemens has announced plans to cut jobs in its automation and electric vehicle (EV) charging sectors globally as part of a strategy to enhance competitiveness. The automation business will see approximately 5,600 jobs affected worldwide, with 2,600 in Germany, while the EV charging sector will face a reduction of about 450 jobs globally. Despite these cuts, Siemens plans to maintain its workforce in Germany through hiring in other expanding areas and will offer re- and upskilling opportunities to those affected. In a significant development, Morgan Stanley (NYSE:MS) has increased Siemens’ stock target from EUR240 to EUR250, maintaining an Equalweight rating, citing the company’s strong performance and achievements. Meanwhile, BofA Securities upgraded Siemens’ stock rating to Buy, raising the price target to EUR265, reflecting a positive outlook on the company’s organic growth and profit margins. Analysts at BofA noted improvements in Siemens’ Digital Industries segment and potential benefits from portfolio evolution, including possible sell-downs of stakes in Siemens Healthineers and Siemens Energy. The revised valuation and upgraded expectations suggest a more optimistic view of Siemens’ future financial performance. These recent developments indicate ongoing strategic adjustments and positive sentiment from analysts regarding Siemens’ prospects.
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