The shares of the ailing energy technology group Siemens Energy, which crashed last week, continued their race to catch up on Monday.
The shares temporarily rose by 15 percent in early XETRA trading. Ultimately it went up 8.57 percent to 8.13 euros.
On Thursday they fell by almost 40 percent after the company reported talks with the federal government about guarantees for large orders. The Federal Ministry of Economics announced on Sunday that negotiations with the former parent company Siemens, which still holds 25.1 percent of the shares, continued at the weekend. Siemens is still hesitant to participate in the guarantees, said two insiders. Siemens declines to comment.
Siemens Energy supervisory board chairman Joe Kaeser tried to allay the concerns in “Welt am Sonntag”. The talks with the federal government are not about state aid. It’s just about guarantees that support Siemens Energy’s growth. “The company clearly does not need any money from the state.”
Analyst Ajay Patel from Goldman Sachs confirmed his “Buy” recommendation for the stock this Monday, which means that he expects continued high return potential at the current price level and compared to the other industry colleagues he observes. However, he lowered his price target by around 20 percent to 20.50 euros.
The incoming orders increase the need for guarantees for long-term projects, Patel explained Siemens Energy’s move. For this reason, the board is evaluating various options to strengthen the balance sheet and is holding preliminary discussions with shareholders, banking partners and also the federal government to ensure the necessary level of guarantees for further business growth. The Goldman expert justified his capped price target primarily with lowered estimates for Siemens Gamesa’s profit margins in view of the energy technology company’s recent statements about the problems of the Spanish wind power subsidiary and further cash outflows by 2028.
Volker Stoll, analyst at Landesbank Baden-Württemberg, upgraded Siemens Energy shares from “hold” to “buy” the day after the share price fell. At the same time, he also lowered his price target by a little more than a third to 9.20 euros. But Stoll is confident for the energy technology group. “Classic energy technology has a solid perspective in the context of the energy transition and could enable a return to profitability in 2024,” he wrote in his study on Friday. On top of that, the European Commission’s plans to give greater consideration to the local added value of wind turbine manufacturers in tenders could gradually improve the long-term earnings conditions for European providers and thus also for Gamesa.
Last but not least, according to him, it seems plausible that Siemens Energy could receive a state guarantee because of the company’s importance for the energy transition. However, the state guarantee of up to 15 billion euros necessary to process the orders has not yet been guaranteed.
Nevertheless, there seems to be a certain level of confidence on the market: based on the current price, the Siemens Energy share has now recovered by a quarter since its low on Thursday at 6.402 euros. Looking at the year so far, however, the paper remains at the bottom of the 40 DAX stocks with a current loss of almost 55 percent.
However, according to index expert Luca Thorißen from the investment bank Stifel Europe, management does not currently have to worry about the company remaining in the DAX in December for the extraordinary index review. According to Thorißen, the share price would have to fall significantly further for this to happen. And the regular index review in March is still a few months away.
Düsseldorf (Reuters) / FRANKFURT (dpa-AFX)
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