Tuesday, January 24, 2012

"Analysts Bleak on Siemens’ Outlook" (SI)

The stock is down $3.14 at $95.05. Don't try to catch a falling (Solingen) blade, it could very well overshoot our $90.00 target.

Despite the headline Siemens is our favorite German-accented multinational industrial conglomerate or, as Samuel Johnson said "When a man is tired of Siemens, he is tired of life".
Or maybe it was London.
Boswell is a bit sketchy...*

We had quite a few posts on Siemens the last time it was in the $90.00 (2010) range,** usually starting with some variation of:
Siemens is GE's much better managed doppelgänger
As the stock passed $130 and then $140 the posts became fewer and fewer.

Now I'm interested again. Just for the record, if SI is a short, sell three times as much GE.
[or you could do a simple long SI-short GE and not let your insane hatred of Jeff Immelt get in the way -ed]

From the Wall Street Journal's The Source blog:
Siemens has its work cut out to combat the effects of the European debt crisis. Profits slumped in the first quarter and the company warned that sales for fiscal 2012 will likely come in at the lower end of forecasts.
A dash round leading analysts covering the company reveals uncertainty as to whether the industrial conglomerate can meet its profit target for 2012.
We kick off with Credit Suisse, which highlights Renewables, Drive Technologies and Transmission as the main areas for concern.
  • CREDIT SUISSE: Siemens is sticking with guidance for an operating profit of €6 billion for the year, but this has become increasingly challenging. The weak quarterly results have put shares under pressure and may lead to consensus downgrades of about 3%. Among its businesses, Industry Automation held up well with order growth of 13% despite cautious management comments earlier in the month, CS noted. The main areas of disappointment were Renewables, Drive Technologies, Transmission and to a lesser extent Power Grid Solutions and Products and Building Technologies. The brokerage has an outperform rating with an €79 target price.
LBBW has many of the same concerns and raises the question as to whether Siemens’s profit targets are realistic.
  • LBBW: Siemens’s first-quarter results have been affected by weak margins in certain divisions, so that the key operating profit figure, “total sector profit,” is significantly below LBBW’s expectations. Incoming orders at gas power plants were under a lot of pressure, and renewables swung to a loss. The EBIT margin in the Diagnostics unit also disappointed, the bank added. Overall exceptional costs, however, were less than what LBBW thought they would be. While Siemens confirmed its fiscal 2012 operating profit target of €6 billion, LBBW said first-quarter results give reason for doubt if this target is still realistic. It maintained hold rating with a target price of €75.
Analysts at JP Morgan, meanwhile, worry that Siemens has greater exposure than its peers to developed markets and governments....four MORE

JPM is right but Siemens has a long term ace up its sleeve: the Euro. We are thinking, barring a breakup of the Eurozone, EUR/USD in the mid 80's by 2018. Take that General Electric.

*I libel Boswell. He may have been pro-slavery and an attorney but the notes he took for The Life more make up for those two failings:
"Why, Sir, you find no man, at all intellectual, who is willing to leave London. No, Sir, when a man is tired of London, he is tired of life; for there is in London all that life can afford."
— Samuel Johnson
September 20, 1777
**One of my favorite headlines:
July 29, 2010
Siemens Sees Strong Profitability, Decides to Open a Bank (SI)