Siemens Energy Shares (ENR) Outlook Raised, Remains Below Current Price

Siemens Energy AG shares (ETR: ENR) have had an impressive recent run, with gains of 77% since the start of the year, and a smile inducing 230% over the past 12 months. With a 10% pullback from recent highs now complete, and the stock officially in correction territory, Barclays' decision to raise its price target from €47 to €66, while maintaining an “Equal Weight” rating, underscores both the progress made and the potential headwinds that remain.

Barclays' revised target reflects increased confidence in Siemens Energy's Gas and Power (G&P) business, a core component of the company's operations. The analysts cite reduced balance sheet risks stemming from prepayments and divestments as key drivers for the upgrade. Despite the upwards revision, the new target remains substantially below the current price of €89.98.

The broader analyst community remains cautiously optimistic, but with a wide range of opinions. JP Morgan, Deutsche Bank and Morgan Stanley have offered more bullish outlooks, with price targets of €78, €95 and €92 respectively, with the latter two both reaffirming their “Buy” ratings, and JP Morgan ‘Neutral'.

This split suggests a debate about the true long-term potential of Siemens Energy, with some believing the transformation is still in its early stages, while others see limited upside from current levels.

The company has ambitious targets for FY2025, including 8–10% revenue growth supported by a robust order backlog of €131 billion, provide further fuel for the bullish argument.

This backlog covers an impressive 93% of projected annual revenue, providing a degree of visibility and stability in uncertain economic times. The company's ability to execute on these orders and translate them into profits will be crucial in justifying its current valuation.

The company has made significant progress in its turnaround efforts, bolstered by strong order backlog and improving financial performance. However, the stock's high valuation, relative to both historical metrics and analyst consensus, suggests that significant expectations are already priced in.