Siemens AG sees orders uptick in 4Q; stock reaffirmed Buy by Redburn-Atlantic

On Thursday, Redburn-Atlantic maintained a positive stance on Siemens AG (SIE:GR) (OTC: OTC:SIEGY (BCBA:SIEGYm)), reiterating a Buy rating and a price target of €230.00. The endorsement follows Siemens (ETR:SIEGn) AG's impressive fourth-quarter results, which surpassed consensus expectations in several key financial metrics.

Siemens AG's fourth-quarter performance showcased robust growth, with orders and sales exceeding analyst projections by 7% and 1%, respectively. The standout sectors were the Mobility and the Digital Industries (DI)/Smart Infrastructure (SI) segments, which both reported better-than-expected results.

Adjusted EBITA and free cash flow (FCF) also outperformed, posting a 6% and 20% increase against consensus, respectively, with the Mobility division making a significant contribution to the latter.

The company's Digital Industries and Smart Infrastructure orders were particularly strong, with organic order growth surpassing consensus by 800 basis points. Digital Industries exceeded expectations due to a robust quarter for Software (ETR:SOWGn), estimated at €2.0 billion versus the Research Affiliates' €1.7 billion projection.

Automation orders were in line with expectations at approximately €2.3 billion. Smart Infrastructure's organic order growth was 500 basis points above consensus, led by a 31% increase in Electrification (Medium Voltage/DC).

Margin improvements were also highlighted, with a 60 basis point increase at the group level. This improvement was primarily driven by Digital Industries, which saw a 210 basis point margin beat, again largely due to Software, and Smart Infrastructure, which exceeded margin estimates by 80 basis points.

Looking ahead, Siemens AG provided an optimistic fiscal year 2025 guidance that surpassed Redburn-Atlantic's expectations. The company anticipates better productivity and demand in Digital Industries, expecting a normalization in fast-turning orders and an improvement in China as destocking is projected to conclude by the end of the first half of 2025.

Additionally, the guidance accounts for approximately €400 million of gains that are expected to balance out an equivalent amount of increased innovation spending. This spending will support the launch of the new '1 Tech Company' program, aimed at creating a common foundation for all software services.

The EPS guidance provided by Siemens AG indicates a 7% upside compared to the consensus, pointing to a positive outlook for the company's financial performance in the coming year.

InvestingPro Insights

Siemens AG's strong performance and positive outlook are further supported by data from InvestingPro. The company's market capitalization stands at $155.22 billion, reflecting its significant presence in the Industrial Conglomerates sector. Siemens has demonstrated solid financial health, with a revenue of $84.22 billion over the last twelve months as of Q3 2024, representing a 5.05% growth.

InvestingPro Tips highlight Siemens' commitment to shareholder value, noting that the company has maintained dividend payments for 33 consecutive years and has raised its dividend for 3 consecutive years. This aligns with the company's strong financial performance and positive guidance mentioned in the article.

The company's P/E ratio of 18.37 suggests a reasonable valuation, especially considering its robust growth and market position. Additionally, Siemens has shown a strong return over the last five years, which is consistent with the positive sentiment expressed by Redburn-Atlantic in their Buy rating.

For investors seeking more comprehensive analysis, InvestingPro offers 8 additional tips for Siemens AG, providing deeper insights into the company's financial health and market position.

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