Friday, December 3

Double-digit falls at Siemens Gamesa have only just begun

Siemens Gamesa shares plummeted to the lows for the year and strengthened its position as the red lantern of the IBEX 35. The share is already moving below 20 euros, with falling targets that exceed double digits.

The announcement of lower profits (profit warning) unveiled by Vestas, its biggest competitor, accelerated the stock market penalty to the Spanish manufacturer of wind turbines, which already lost nearly 40 percent in the year.

Vestas itself sank more than 15 percent and marked the biggest setback since November 2017, after reporting a 23 percent drop in net profit and adjusting its business forecasts downward.

Siemens Gamesa discounts the impact of supply problems on the sector

Other competitors like Nordex They also lost more than 8 percent, discounting investors that the environment has become much more dangerous for the renewable energy sector.

The problem is that rising raw materials, bottlenecks and supply chain disruptions are eating away at present profits and future projections.

In the case of Siemens Gamesa, concerns about the progress of the business are not new. In mid-July, the company unveiled a harsh profit warning in which it pointed out that its margin on EBIT this year will not be positive.

Siemens Gamesa was never able to recover the 27 euros the share was trading at prior to this announcement. The market has serious doubts that it can deliver on its strategic plan.

Rising energy prices, raw material cost inflation, increased transportation and rising turbine components are the new elements that Vestas brought to the table.

And judging from the market reaction, they pose a very real threat.


-2,62-11,78 %


The market expects a lot of caution in the guides

As much or more important than the results presented by Siemens Gamesa will be the business outlook for the coming quarters. “We expect the group to publish cautious guidance for fiscal year 2022,” said analysts from Deutsche Bank.

These analysts were forced to cut their earnings per share estimates for Siemens Gamesa by 34 percent for next year and calculated a price target of 21 euros. They found no more catalysts to raise a valuation that they already see very tight.

The situation is very different from what it was in January, when the company began setting annual highs at 38 euros.

Since then, the value has been marking decreasing maximums and drawing a book downtrend, fueled by fear of the bursting of the bubble in renewable energy.

The 17.5 euros as the objective of the downward movement

The new bearish momentum placed Siemens Gamesa below the psychological support of 20 euros. In addition, the movement is very serious since it occurred with a volume that tripled the daily average.

The stock is at its lowest for the year and has weak support over the 19.2 euro area.

But the extension of the downward movement could take the correction to 17.5 euros, an area where the average of 200 sessions passes, explained José Luis Herrera, an analyst at Banco de Inversión Global. The margin of decline to this level exceeds 10 percent.

With the recent fall, the very short-term dynamic support that made up the average of 200 sessions, now at 22 euros, also blew up.

It is true that Vestas’ profit warning contributed to accelerating the falls, but according to Herrera explained, the stock hit this year up to three times against the bearish guideline that Siemens Gamesa has brought since the January highs.

The market’s caution is maximum.

For something, it is the worst value of the IBEX 35, with a cumulative fall in the year of 30 percent, a long way from the 17 that Pharmamar loses, the penultimate value listed by the selective’s tail.