Last Update 07 Dec 25
Fair value Increased 5.55%ENR: Buyback Program And Gas Grid Upswing Will Shape Future Returns
The analyst price target for Siemens Energy has been raised by about EUR 6 to approximately EUR 120, reflecting analysts' expectations for stronger revenue growth, improving profit margins, and sustained demand across its gas and grid portfolio.
Analyst Commentary
Recent Street research on Siemens Energy has been dominated by upward revisions to price targets, with multiple firms lifting their estimates into a EUR 100 to EUR 136 range and, in several cases, reiterating positive ratings. The pattern points to growing confidence in the companys ability to execute on its gas and grid strategy and to translate a robust project pipeline into sustainable earnings growth.
Initiation of new coverage with favorable ratings, alongside upgrades from more cautious stances, underscores a shift in sentiment from repair and restructuring toward growth and value realization. Analysts note that the portfolio is well positioned against key energy transition themes, supporting a higher long term valuation framework than previously assumed.
At the same time, some targets are being raised from a more neutral footing, reflecting that not all concerns around execution risk, capital intensity, and margin durability have fully faded. The dispersion in target prices suggests that, while the direction of travel is clearly positive, investors are still calibrating how quickly Siemens Energy can convert its strategic positioning into consistently higher returns.
Bullish Takeaways
- Bullish analysts see the steady progression of price targets from roughly EUR 100 toward the mid EUR 130s as evidence that the equity story is transitioning from recovery to growth, supporting multiple expansion.
- Upgrades to Buy and Outperform ratings are being justified by the view that the current share price underappreciates the companys leverage to a multi year gas and grid investment upcycle, implying further upside to consensus revenue and earnings forecasts.
- The belief that Siemens Energys portfolio directly addresses core challenges in the global energy system is driving confidence in sustained order intake and backlog quality, which in turn underpins improved margin and cash flow trajectories.
- Higher targets across several research houses signal increasing conviction that operational issues are being contained and that execution risk is now more manageable, warranting a tighter discount to peers in valuation models.
Bearish Takeaways
- Bearish analysts, or those maintaining Neutral stances despite raising targets, point to ongoing execution complexity in large scale grid and generation projects, which could cap near term margin expansion and limit upside to current valuations.
- Some remain cautious on the capital intensity of the growth plan, highlighting that elevated investment needs and project risk could delay the pace at which free cash flow improves, tempering re rating potential.
- The spread between more conservative targets around EUR 100 to EUR 116 and the most optimistic levels above EUR 130 indicates lingering uncertainty around the durability of recent profitability gains and the ability to fully de risk legacy exposures.
- There is also concern that, despite structural demand tailwinds, any slowdown in broader industrial spending or policy support for grid and gas investments could pressure order momentum and challenge the higher growth assumptions embedded in bullish cases.
What's in the News
- The Board of Directors has authorized a new share buyback plan, signaling confidence in capital returns and balance sheet strength (Key Developments).
- Siemens Energy has launched a share repurchase program of up to €6 billion, running through the end of fiscal 2028, highlighting a long-term commitment to shareholder returns (Key Developments).
- Oklo Inc. and Siemens Energy have signed a binding contract for the power conversion system for Oklo's Aurora powerhouse at Idaho National Laboratory, advancing Siemens Energy's role in next-generation nuclear projects (Key Developments).
- Fermi America and the Texas Tech University System have signed letters of intent with Siemens Energy to secure 1.1 GW of gas turbine equipment and to collaborate on nuclear steam turbine technologies for an 11 GW AI-focused energy campus, expanding Siemens Energy's footprint in U.S. power and AI infrastructure markets (Key Developments).
- Siemens Energy has issued a financial outlook for fiscal 2026, targeting 11% to 13% comparable revenue growth and net income of $3 billion to $4 billion (Key Developments).
Valuation Changes
- Fair Value has risen slightly from approximately €113.61 to about €119.92, signaling a modest uplift in the long term intrinsic valuation.
- Discount Rate has increased marginally from about 6.87 percent to roughly 6.99 percent, indicating a slightly higher required return embedded in the valuation model.
- Revenue Growth has risen slightly from around 11.24 percent to about 11.82 percent, reflecting a modestly stronger top line outlook.
- Net Profit Margin has increased moderately from roughly 8.78 percent to around 9.56 percent, pointing to improved profitability expectations.
- Future P/E has edged down from about 25.81x to roughly 24.70x, suggesting a modestly lower valuation multiple despite higher earnings assumptions.
Key Takeaways
- Overly optimistic expectations for rapid grid modernization, wind business turnaround, and international growth may not account for execution, policy, and affordability risks.
- Strong current order intake could mask future margin pressures, working capital strains, and potential revenue volatility from supply chain and market headwinds.
- Robust order growth, secular energy transition trends, operational turnarounds, and a healthy financial position all support sustained profitability, resilience, and long-term value creation.
Catalysts
About Siemens Energy- Operates as an energy technology company worldwide.
- The share price may be factoring in an overly optimistic pace of global grid modernization and electrification, as recent strong order intake in Grid Technologies and Gas Services is fueled by major trends like surging data center demand and the energy transition. However, if grid upgrades and permitting slow or if customer affordability concerns in major HVDC projects grow, future revenue growth could fall short of current market expectations.
- Investors could be overestimating margin expansion, as the current strong pricing environment in gas turbines may normalize. Management acknowledged that price increases are already tapering, and elevated input costs or increased competition could limit further improvements in net margins and earnings.
- The current valuation may reflect a belief in a rapid and sustained turnaround in the wind business (Siemens Gamesa), with breakeven assumed as soon as fiscal 2026. Execution risks from ongoing restructuring, lingering 4.X and 5.X product issues, and potentially slower offshore market growth could lead to continued earnings volatility and delays in restoring net margins.
- The stock could be pricing in uninterrupted international growth, particularly from electrification and rising energy demand in the U.S. and emerging markets. However, elevated geopolitical tensions, trade barriers (e.g., tariffs with the EU and U.S.), and unpredictable policy shifts may lead to delayed or lumpier revenue streams.
- High current backlog and order intake may create the impression of long-term revenue visibility and strong future free cash flow. This overlooks risks like supply chain constraints, capacity bottlenecks, and large working capital requirements to deliver on these orders, which could compress free cash flow and profitability if execution difficulties arise.
Siemens Energy Future Earnings and Revenue Growth
Assumptions
How have these above catalysts been quantified?- Analysts are assuming Siemens Energy's revenue will grow by 9.1% annually over the next 3 years.
- Analysts assume that profit margins will increase from 0.5% today to 7.3% in 3 years time.
- Analysts expect earnings to reach €3.6 billion (and earnings per share of €4.08) by about August 2028, up from €198.0 million today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as €2.1 billion.
- In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 22.8x on those 2028 earnings, down from 393.7x today. This future PE is lower than the current PE for the DE Electrical industry at 42.5x.
- Analysts expect the number of shares outstanding to grow by 0.51% per year for the next 3 years.
- To value all of this in today's terms, we will use a discount rate of 6.52%, as per the Simply Wall St company report.
Siemens Energy Future Earnings Per Share Growth
Risks
What could happen that would invalidate this narrative?- Continued record-high order intake and a growing order backlog (€136 billion, up 65% YoY and diversified across geographies and business lines) establish strong future revenue visibility, contradicting the risk of declining revenues in the long term.
- Secular demand drivers-such as electrification (especially for power-intensive data centers), energy transition (offshore wind, grid upgrades, HVDC), and decarbonization policies-are supporting robust multi-year growth in key Siemens Energy markets, which may lift revenues and order flows well into the future.
- Turnaround initiatives and productivity improvements at Siemens Gamesa, including the revised 4.X and 5.X turbines and offshore ramp-up, are positioned to reduce losses and potentially return the wind division (currently a drag on group profitability) to breakeven by fiscal year 2026, improving overall net margins and earnings.
- Leadership positions in grid technologies and gas turbines (with ongoing capacity expansion, positive pricing power, and increasing service revenues) are likely to sustain or improve profit margins and recurring earnings as long-term service agreements and modernization projects become a greater share of the business.
- Stronger financial profile (net cash position of €4.4 billion, maintained investment grade ratings, and de-risked capital structure post-Bund guarantee exit) enables both reinvestment for growth and shareholder capital returns, underpinning the company's ability to sustain dividends and absorb cyclical shocks, thereby supporting long-term valuation and share price stability.
Valuation
How have all the factors above been brought together to estimate a fair value?- The analysts have a consensus price target of €83.755 for Siemens Energy based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of €136.0, and the most bearish reporting a price target of just €37.0.
- In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be €48.7 billion, earnings will come to €3.6 billion, and it would be trading on a PE ratio of 22.8x, assuming you use a discount rate of 6.5%.
- Given the current share price of €98.66, the analyst price target of €83.76 is 17.8% lower. Despite analysts expecting the underlying buisness to improve, they seem to believe the market's expectations are too high.
- We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.
How well do narratives help inform your perspective?
Disclaimer
AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.
