Siemens Energy: Our take on today’s -9% share price reaction – unwarranted

Research evidence excerpt

Siemens Energy: Our take on today’s -9% share price reaction – unwarranted

Phil Buller AC Europe Equity Research

(44-20) 3493-9403 22 July 2026 J P M O R G A N

phil.buller@jpmorgan.com

Investment Thesis, Valuation and Risks

Siemens Energy (Overweight; Price Target: €235.00)

Investment Thesis

• Strong and Sustainable FCF Trade: Siemens Energy’s earnings growth outlook

through 2028 is stronger than peers, with company guidance likely beatable in Gas

Services (GS), Grid Tech (GT), and possibly Gamesa. The company is locking in

supply/demand imbalances into long-term, profitable service contracts extending into

the 2040s. GS services FCF alone could justify the current valuation and provide

protection against future volatility.

• Electricity Demand Growth: Accelerating electricity demand, driven by

electrification and AI, especially in the US, will require significant grid investment.

Siemens Energy, with its leading gas turbines, grid equipment, and offshore wind

portfolio, is well-positioned to benefit from this trend and generate recurring FCF from

service contracts.

• Share Price Outlook: Despite a strong share rally, there is potential for >50% upside

over 12-18 months as long-only investors revisit the stock, driven by improved FCF

margins similar to Rolls-Royce’s recent performance.

• Wind Business Turnaround: The wind business turnaround is nearly complete, with

break-even expected before the end of 2026, despite challenges from a reduced onshore

presence.

Valuation

To derive our Dec-27 PT of €235, we value Siemens Energy on 24x calendarised 2028E

EV/EBITA. The multiple is derived from a reverse DCF using long-term growth,

normalised margin, capital structure, cost of capital, capital intensity and tax rates, among

others.