Siemens Energy AG 2Q26 call confirms order and grid business resilience, but the share price is already slightly above the target price

Overview

This report is UBS's commentary on Siemens Energy AG's 2Q26 earnings call. The core conclusion is that the call delivered strong operating confirmation signals: 3Q26 gas turbine order momentum remains solid, Grid Technologies margin guidance has been raised with execution improving, and wind power losses and cash burn are improving. Although the €175 target price is slightly below the May 11 share price of €178.50, UBS still maintains Buy (CBE), focusing on support from orders, margins, and shareholder returns for medium-term expectations.

Core views

UBS's core views are as follows: first, after a strong 1H26, gas turbine orders remain solid in 3Q26, the 2027 demand pipeline is strong, and higher pricing should improve backlog margins and increase visibility for FY29-FY30 EBITA; second, the company expects to update FY30 capacity targets at the November earnings release and may include recurring grid-monitoring software growth opportunities such as Noedra for Grid Tech; third, Grid Tech's 2026 margin guidance was raised to 18%-20%, and 2H26 would need to exceed 20.3% to reach the midpoint, which UBS believes creates room for 2027 consensus upgrades; fourth, wind power is likely to reach breakeven in 3Q26, and the path toward improved FY28 cash burn remains unchanged; fifth, ENR still trades at a clear valuation discount to GE Vernova, and the discount has room to narrow if wind power improves and shareholder returns are delivered.

Analysis framework

The report analyzes earnings call information, management comments on orders and margins, changes in segment guidance, peer valuation comparisons, and a SOTP valuation framework. UBS focuses on gas turbine order volume, backlog mix and pricing, the Grid Technologies margin path, Siemens Gamesa cash burn, and ENR's EV/EBITA discount versus GE Vernova.

Methodology notes

• Valuation methodsBlended DCF and EV/EBITA SOTP

  SOTP valuation combining DCF and EV/EBITA multiples

  UBS says it uses a blended DCF and EV/EBITA multiple-based SOTP valuation for Siemens Energy, with key sensitivities including Grid Technologies growth, Gas Services gas turbine market growth, Siemens Gamesa earnings recovery, and pricing improvement.

• rating_methodologyForecast Stock Return vs Market Return Assumption

  Forecast stock return relative to market return assumption

  UBS defines FSR as the expected 12-month price appreciation plus dividend yield, and MRA as the local market interest rate plus 5% for one year. This report discloses a forecast dividend yield of 0.4%, a forecast stock return of -1.6%, and a market return assumption of 7.7%.

• catalyst_reviewQuantitative Research Review

  Three-month catalyst and fundamental-direction scoring

  The quantitative research questionnaire shows an industry structure score of 5, a regulatory environment score of 4, a stock fundamental score over the past 3-6 months of 4, and a relative consensus EPS revision score of 4, and marks the 5 August 2026 3Q26 order and pricing comments as a positive catalyst.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Siemens Energy AG (ENR1n.DE)

  Coverage name and report subject

  Strengths

  Strong gas turbine order pipeline, higher Grid Technologies margins, an additional buyback showing confidence in cash flow, and still a valuation discount versus GE Vernova.

  Weaknesses

  The current price is slightly above the target price, and forecast price appreciation is -2.0%; the wind power business still has quality-related cash outflows and high offshore wind expansion capex.

  Comparison

  ENR trades at about a 40% discount to GE Vernova on 2028E EV/EBITA; the year-end total commitment guidance of 90-100GW is below GEV's 110GW.

  Risks

  Order volatility, contract pricing or execution missteps, wind power recovery falling short of expectations, Grid Tech margins failing to hold, and the valuation discount failing to narrow.

• GE Vernova Inc (GEV.N)

  Peer used for valuation and order-commitment comparison

  Strengths

  The report discloses GEV as Buy, and the year-end commitment reference is 110GW.

  Weaknesses

  The article does not expand on GEV's own operating weaknesses.

  Comparison

  Siemens Energy trades at about a 40% discount to GEV on 2028E EV/EBITA.

  Risks

  The article mainly uses GEV as a valuation reference and does not provide an independent risk analysis.

• Siemens Gamesa Renewable Energy SA

  Siemens Energy's wind-related subsidiary/business

  Strengths

  It is expected to reach breakeven in 3Q26, and FY28 cash burn is improving toward breakeven.

  Weaknesses

  This year still has about €400 million of quality-related cash outflows, offshore wind expansion capex remains high, and the reduction in contract liabilities is still ongoing.

  Comparison

  Improvement in the wind business is viewed as one of the key factors that could narrow ENR's valuation discount versus GEV.

  Risks

  Quality-related cash outflows, execution issues, and slower-than-expected earnings recovery and market share recovery.

Key data

• 12-month RatingBuy (CBE)Disclosed in the summary table as Siemens Energy AG's rating of Buy (CBE).
• 12-month Target Price€175.00Disclosed on the report cover page.
• Current Price€178.50Price date is 11 May 2026.
• Forecast Price Appreciation-2.0%Forecast price appreciation.
• Forecast Stock Return-1.6%Includes a forecast dividend yield of 0.4%.
• Market Return Assumption7.7%MRA in UBS's rating framework.
• Forecast Excess Return-9.2%Forecast excess return.
• Grid Tech 2026 Margin Guidance18%-20%Previously around 16%-18%; 1H26 already reached 17.4%, and if the midpoint is to be reached, 2H26 would need to exceed 20.3%.
• Gas Turbine Commitment Guidance90-100GW total commitments by YE 2026The report believes there is room to exceed guidance; the comparison with GEV is 110GW.
• Potential New Orders in FY26about 45GWUBS estimates this is above the 36GW booked guidance for 2026 and above FY25's 26GW.
• Additional Buyback€1bn in FY26UBS believes this is a confidence signal regarding improved wind power cash burn.
• ENR Valuation Discount vs. GEVabout 40%Based on a comparison of 2028E EV/EBITA with GE Vernova.
• Market Cap€154bn / US$182bnDisclosed in the report's trading data table.
• EPS Forecast09/26E €3.92; 09/27E €5.49; 09/28E €7.33UBS diluted EPS forecast; the table also shows consensus estimates of 4.19, 5.68, and 7.39, respectively.

Impact & implications

For investment implications, the report emphasizes medium-term earnings upgrades rather than near-term target price upside: continued orders and pricing can improve visibility for future EBITA in Gas Services, the Grid Tech margin uplift may drive 2027 consensus upgrades, and if wind power improves as planned, cash burn concerns should ease and support valuation discount narrowing. However, the current share price is already slightly above UBS's target price, so the short-term return profile is not particularly attractive; the investment case depends more on subsequent delivery of orders, margins, and wind recovery.

Risks

• Gas turbine orders are quarterly volatile, and management also warned against over-interpreting order momentum on a quarter-on-quarter basis.
• Contract businesses face common risks, including mispricing and poor execution.
• Siemens Gamesa still faces quality-related cash outflows, offshore wind expansion capex, and pressure from declining contract liabilities.
• If Grid Technologies' high margins are mainly driven by short-term factors, the 2027 consensus uplift may not materialize.
• The current share price is slightly above the target price, so the short-term price return is negative.
• Valuation depends on multiple assumptions, and changes in DCF, EV/EBITA multiples, and segment SOTP assumptions could materially affect the result.
• Changes in the market, interest rates, exchange rates, regulation, and sanctions environment may affect the security's value and the company's operations.

What to watch

• The 5 August 2026 3Q26 order and pricing comments, which the report marks as a positive catalyst on the actual date.
• 3Q26 new gas turbine orders, the speed of conversion from slot reservations to firm orders, and the 2027 order pipeline.
• Whether 4Q26 order growth slows and whether year-end total commitments exceed the 90-100GW guidance.
• Management's updates to FY30 capacity targets and new Grid Tech targets at the November earnings release.
• Whether Grid Technologies' 2H26 margin can exceed 20.3% and support the full-year 2026 margin guidance of 18%-20%.
• Whether grid-monitoring software solutions such as Noedra can generate higher recurring revenue and margins.
• Whether Siemens Gamesa reaches breakeven in 3Q26 and whether the FY28 cash burn breakeven path remains intact.
• Execution progress on the additional €1 billion FY26 buyback and subsequent shareholder return policy.