Siemens' shares had a robust week, leading to speculation: has the current breakout proven successful?
Siemens, the German engineering conglomerate, has been making headlines recently due to its impressive performance and optimistic forecasts. Andre Kukhnin, an analyst at Swiss bank UBS, has praised the attractive valuation of Siemens and expects positive catalysts to emerge in the near future.
Digital Industries and Smart Infrastructure Divisions Drive Growth
The key growth drivers for Siemens' Digital Industries and Smart Infrastructure divisions are primarily centered on digitalization and sustainability. The company has reported robust growth momentum in orders, revenue, and net income, largely fueled by these drivers, which remain central to their strategy and market demand.
For the Digital Industries division, growth is supported by advances in industrial automation, industrial AI technologies, and the integration of scientific intelligence. Siemens' strategic move to acquire Dotmatics to expand into life sciences markets and enhance digital capabilities is a testament to this focus.
The Smart Infrastructure division benefits from rising demand for energy-efficient, intelligent building technologies and infrastructure modernization aligned with sustainability goals. Siemens' strategic focus on decarbonization and smart energy solutions, combined with global innovation hubs and partnerships, drives growth in this division.
Positive Outlook and Expectations
Siemens projects sustained and profitable growth with a comparable revenue growth forecast of 3% to 7% for the whole group, along with a book-to-bill ratio above 1, indicating strong order intake relative to revenue. The company also confirms confidence in delivering double-digit free cash flow returns in fiscal 2025, supporting reinvestment and shareholder returns.
Although specific division-level margin forecasts are not detailed in the public reports for Q2 2025, the overall results show strong margin improvements and robust free cash flow generation, indicating operational efficiency improvements that should benefit these divisions as well.
Mobility Division Shines
The Mobility division of Siemens had a particularly strong quarter, with a significant increase in orders. Phil Buller, an analyst at U.S. bank JPMorgan, highlighted the strong order intake in the Mobility division, which came in at nearly eight billion euros, 86 percent above consensus estimates.
Siemens Stock Performance
Siemens' stock gained significant momentum and ranked among the top performers in the German stock market index, DAX. The stock experienced a nine percent increase last week, placing it among the top four performers in the DAX. If successful, the record high of 244.85 euros, set in March, will be within reach for Siemens stock. A clear buy signal for Siemens stock would only be triggered by a move above the level of 244.85 euros.
The 200-day moving average provides support for Siemens stock. Despite initial muted responses to its quarterly results last Thursday, Siemens stock subsequently rallied strongly. Siemens stock is poised to break out of the upward trend established since May.
Analysts' Perspective
Several analysts expressed positive sentiments about Siemens following the release of its quarterly results. Andre Kukhnin, an analyst at Swiss bank UBS, raised the stock's price target for Siemens from 240 to 255 euros. Phil Buller, an analyst at JPMorgan, expressed positive sentiments about Siemens, specifically highlighting the strong performance of the Mobility division.
Andre Kukhnin continues to recommend buying Siemens stock and anticipates positive news regarding margins in the Digital Industries segment in the next quarterly report in November. He also anticipates positive news regarding order intake in the Smart Infrastructure division in the next quarterly report.
This positioning aligns Siemens with global trends in digital transformation and sustainability, underpinning the strong Q2 performance and outlook for these divisions.
Investing in Siemens stock could be an attractive opportunity, as the company's performance and optimistic forecasts have caught the attention of analysts. Andre Kukhnin, an analyst at Swiss bank UBS, raised the stock's price target for Siemens from 240 to 255 euros and anticipates positive news regarding margins in the Digital Industries segment and order intake in the Smart Infrastructure division in the next quarterly report. The growth of Siemens is driven by its focus on digitalization and sustainability, particularly in its Digital Industries and Smart Infrastructure divisions, as well as its impressive performance in the Mobility division.
