Siemens AG shares slip after BofA downgrade, citing recovery concerns

Investing.com -- Shares of Siemens AG (ETR:SIEGn ) were down on Tuesday following a downgrade by analysts at BofA Securities.

At 6:00 am (11:00 GMT), Siemens AG was trading 3.3% lower at €178.

The brokerage revised its rating to “neutral” from “buy,” citing concerns over limited earnings momentum and recovery uncertainties in Siemens’ key business segments, particularly Digital Industries (DI). 

While Siemens ended 2024 strongly, BofA suggests that 2025 could present challenges, with earnings per share guidance projected to remain flat year-over-year.

Siemens faces headwinds due to slow recovery in demand for automation, a core component of its DI segment, as per analysts at BofA. 

BofA noted that DI’s profitability is in question, with a wide guidance range of -6% to +1% organic growth and 15-19% margins for 2025, signaling volatility. 

While the company’s software business, driven by its transition to a Software-as-a-Service model, shows positive momentum, this is unlikely to fully counterbalance weaknesses in the automation sector in the near term.

BofA flagged a strong outlook for Siemens’ Smart Infrastructure (SI) division, particularly in the datacenter market. 

However, this segment’s robust performance is already reflected in current market expectations. 

Consequently, the downgrade also factors in limited upside potential from current valuation levels. The bank adjusted its price objective to €200, reflecting constrained growth prospects amid elevated market expectations.

Despite these challenges, Siemens’ long-term fundamentals remain sound, supported by strong free cash flow and strategic capital allocation moves, including the funding of its Altair acquisition.

However, BofA remains cautious about the company’s near-term trajectory due to lingering uncertainties in demand dynamics across critical sectors.

Source: Investing.com