Siemens Healthineers Downgraded to Hold by Berenberg on Weak Earnings and Structural Headwinds

Berenberg has downgraded Siemens Healthineers to a Hold rating from Buy, slashing its price target to €39 from €54. The broker cited a lack of visibility on positive earnings revisions and significant structural overhangs that are expected to weigh on the company's stock performance.

Weakening Earnings Momentum

Analysts at Berenberg highlighted that Siemens Healthineers has underperformed the Stoxx 600 index due to a mix of factors including foreign exchange effects, tariffs, inflation, and a soft market in China. This follows the company's decision in May to lower its adjusted earnings per share (EPS) guidance for the fiscal year to a range of €2.20-€2.30, down from €2.20-€2.40, attributing the cut to supply-chain inflation.

Since the start of 2025, consensus adjusted EPS estimates for the 2025/26 period have fallen by 20%, according to the report. In response to the persistent headwinds, Berenberg has lowered its own EBIT estimates for Siemens Healthineers for 2026-2028 by 6.5% to 8.5%.

Overhangs and Competitive Pressures

Berenberg identified two primary issues creating uncertainty for investors. The first is the drawn-out process of spinning off from parent company Siemens AG, which plans to transfer a significant stake to its own shareholders. A shareholder vote on the matter is not scheduled until the first quarter of 2027.

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The second major overhang is the underperformance of the company's Diagnostics division. According to a recent statement from CFO Jochen Schmitz, it could take up to 24 months to prepare the unit for a potential divestment. Compounding these challenges, Berenberg warned of rising competition in the high-end CT market from 2027, following the FDA's approval of GE HealthCare’s new photon-counting CT scanner.

Valuation and Outlook

While acknowledging that Siemens Healthineers' shares trade at a discount to med-tech peers at roughly 11 times its 2025/26 EV/EBITDA, Berenberg sees limited catalysts for the stock. Analysts stated that "beyond being 'cheap', we see few reasons to proactively own the shares at present."

Because share prices in the medical technology sector tend to follow earnings momentum, the broker said it struggles to see the stock re-rating in the near term. Berenberg sees more downside than upside risk to current consensus forecasts and prefers to wait for the headwinds to subside before adopting a more positive stance.