Kepler Cheuvreux moved Siemens AG up one step on its rating scale on Friday, changing its recommendation from "reduce" to "hold" and increasing its price target to €280 from €255. The broker framed the move as timing the company at a "pivotal point" ahead of Siemens' third-quarter results scheduled for August 6.
The new target represents a 9.8% change versus the prior level. Siemens shares finished trading at €276.90 on July 2, leaving a narrow 1.1% gap to the revised target. Siemens' market value at that close was reported at €212.2 billion.
In its note, Kepler Cheuvreux said it had lifted its 2026-2028 forecasts above consensus. The broker argued several industry-specific and company-specific risks appear diminished, writing that "downside risk to industrial automation forecasts appears de minimis," the period of de-rating for industrial software assets "is played out," and that the deconsolidation of Siemens Healthineers "is fast approaching."
Kepler described a structural shift for Siemens beginning in early 2027, when the company will be "entering a new era, fully focused on its leadership across critical industrial software and hardware markets, with a portfolio of businesses positioned to achieve high single-digit growth." The broker added that much of the potential valuation re-rating has already taken place over the past 12 months, while noting that uncertainty remains around the timing of cycle recovery.
Looking ahead to the August 6 results, Kepler Cheuvreux highlighted expectations for business-specific operational improvements. The firm anticipates "positive operational gearing" at Digital Industries and "rising volumes" at Smart Infrastructure, outcomes it believes can help Siemens deliver an earnings beat versus available expectations. The broker also sees scope for Siemens to lift margin guidance.
Kepler further pointed to what it characterized as "rapid order growth" at Smart Infrastructure, which has expanded the group's order backlog and, in the broker's view, lays the groundwork for "higher-than-expected revenue growth" within the Electrification unit.
On the numbers, Kepler Cheuvreux set sales forecasts at €83.19 billion for fiscal 2026, €90.90 billion for 2027 and €96.09 billion for 2028. It projected adjusted EBITDA of €15.24 billion, €17.08 billion and €19.08 billion, and adjusted EBIT of €11.82 billion, €13.44 billion and €15.23 billion over the same three-year span.
Adjusted net profit was forecast at €9.36 billion in 2026, rising to €10.74 billion in 2027 and €12.20 billion in 2028. Net financial debt was projected to decline to €39.95 billion, €35.88 billion and €30.34 billion across 2026-2028. Kepler's adjusted, fully diluted earnings per share estimates were €12.21, €14.21 and €16.15 for 2026-2028, which it noted are above consensus figures of €10.9, €12.7 and €14.2. The broker also penciled in net dividends of €5.75, €6.30 and €6.75 across those years.
Kepler Cheuvreux said it expects the 2027-2030 period to demonstrate a "substantial increase in operating profitability" for Siemens' industrial software business, adding that after more than three years of investment to transition to a full software-as-a-service model, the payoff is poised to become evident.
Context and implications
- Kepler's upgrade and forecast raises signal expectations of improving operational leverage at Digital Industries and volume-driven growth at Smart Infrastructure.
- The broker expects the Electrification unit to benefit from backlog expansion, potentially supporting stronger-than-anticipated revenue in that business.
- From early 2027, the firm projects Siemens will be concentrated on leadership in industrial software and hardware, targeting high single-digit growth.