JPM ups Siemens Energy to 'overweight' on FCF potential, shares rise

Siemens Energy AG

04/12/2025 09:37

** Siemens Energy's ENR1n.DE shares rise 2.5% after J.P. Morgan ups its rating for the German company to "overweight" from "neutral," citing strong and sustainable free cash flow (FCF) generation until 2040

** The broker expects general electrification and AI trends  to spread beyond the U.S., driving further growth for new power generation assets and renewed investment in grid infrastructure

** JPM says service contracts support long-term cash flows, and it estimates Siemens Energy's Gas Services division revenues alone to reach 12 billion euros ($14 billion) by 2028 with margins of up to 30%, representing around 20% of the company's revenue

** "We ... take comfort in the fact that the company is crystallizing the current supply/demand imbalance into highly profitable, decades-long service contracts that will run into the 2040’s," JPM adds

** The broker notes other upsides, such as Siemens Energy's 1.2% trademark fee which it will no longer pay to Siemens SIEGn.DE from 2030, and a swap in shares with Siemens as well as an obligation to reach 51% of ownership of Siemens Energy by 2028

** Siemens Energy stock is up 132% year-to-date

($1 = 0.8564 euros)

 (Reporting by Tristan Veyet)

 ((Tristan.chabba@thomsonreuters.com))