Siemens Energy: Initiate Coverage With EUR 14.80 Fair Value and Very High Uncertainty Rating

We’re initiating coverage of Siemens Energy with a EUR 14.80 fair value estimate, a 25% discount to the current share price. Investors have rushed for the exits in response to severe losses incurred during fiscal 2023, largely confined to the Siemens Gamesa division, but have nevertheless cast doubts over the group's balance sheet. Their concerns have been alleviated somewhat by EUR 3 billion in announced asset disposals and guarantees from the German government to ensure the delivery of its order book. Restoring profitability depends on the duration of the turnaround at Siemens Gamesa and the magnitude of repair costs required to fix faulty wind turbines, underpinning our Very High Morningstar Uncertainty Rating. Our fair value estimate implies an EV/sales (fiscal 2024) ratio of 0.4 times.