On Wednesday, HSBC renewed its 'light' recommendation on Siemens shares, with a target price of 150 euros, the day after the German industrial group released its new forecasts.
At a meeting with the financial community yesterday, Ralf Thomas, the conglomerate's CFO, acknowledged that the decline in sales of the Digital Industries (DI) division - dedicated to industrial automation and digitization - could be steeper than expected in the current fiscal second quarter.
While HSBC attributes this weakness to weak demand in China and customer destocking, it points out that both factors are unfortunately likely to continue until the end of the fiscal year.
The analyst notes that the vitality of the building and infrastructure technology businesses - Smart Infrastructure (SI) - should certainly help to offset this shortfall, but believes that this disappointing outlook belies any hopes of a future rebound in business.
In this sense, he concludes, the uncertainty surrounding the achievement of Siemens' annual targets should continue to weigh on market sentiment.
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Siemens AG is one of the world's leading manufacturers of electronic and electro-technical equipments. Net sales (including intragroup) break down by family of products as follows:
- digital industrial equipment (28.2%): automated production, assembly, logistics and monitoring systems, etc.;
- medical equipment (27.8%): medical imaging systems, laboratory diagnostics and hearing aid systems, etc.;
- smart building and infrastructure solutions (25.6%): energy transition solutions, HVAC products (heating, ventilation and air conditioning systems), building security systems (fire detection and protection systems, access control, video surveillance and intrusion detection systems, etc.), building management systems, etc.;
- mobility solutions and systems (13.5%): rail vehicles, rail automation systems, rail electrification systems, digital and cloud-based solutions, etc.
The remaining net sales (4.9%) are primarily from financial activities (leasing, equipment and project financing, financial consulting services, etc.).
Net sales are distributed geographically as follows: Germany (16.3%), Europe/CIS/Africa/Middle East (30.8%), the United States (23.9%), America (5.2%), Asia and Australia (23.8%).