Siemes Gamesa: We lower our target price to €14.00 fearing a cloudy ou
- Negative market reaction after the results
- Our concerns are on the cloudy outlook
- No timing indications on improvements
- Renewable auctions will hit selling prices
- Our target price is cut to €14.00
We see little earnings visibility and fear that the paradigm shift will lead to lower margins. In 2016, Gamesa had a 10.4% EBIT margin, we expected c.10% for Gamesa Siemens and have lowered out forecast to c.8%. Consequently, we are cutting our target price to €14.00 from €21.16 (a +8% potential) and maintain our Hold recommendation unchanged.
Siemens Gamesa Renewable Energy is a holding company. Through its subsidiaries, Co. is engaged in the business of renewable energy sources, primarily wind power but also including solar energy where its acts as a supplier and manufacturer of technological products, installations and services. Co. is organized along the lines of: promotion, construction and sale of wind farms, engineering, design, manufacture and sale of wind turbines, manufacture of thermic and photovoltaic solar components, promotion and sale of photovoltaic solar farms. Co. also participates in both Spanish and European working groups aimed at establishing priorities for its sector's research & development work.
Bankinter S.A. is a Spanish brokerage firm established in 1989. The company's line of business includes the provision of market research and trading services for Equity and Fixed Income products.
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