Siemens Falls After Goldman Sachs Downgrade on Outlook Risks

  • Shares fall 2.2 percent, most in more than two weeks
  • Siemens has failed to shed unprofitable assets: Goldman Sachs

Siemens AG fell the most in two weeks after Goldman Sachs Group Inc. said it no longer recommended buying shares in Europe’s largest engineering company given a risk of further profit disappointments.

The company, based in Munich, is facing increasing challenges as the economies of both Germany and China slow, Goldman Sachs said in a report outlining why it downgraded its rating on Siemens stock to “neutral” from “buy.” Last year’s $9 billion spend on acquisitions has failed to spur the stock, it said. The shares fell as much as 2.2 percent.

While the potential for significant cash to be returned to shareholders in 2015 is a positive, in the medium term, there’s "material downside risk" to consensus earnings forecasts, according to Goldman Sachs.

Siemens, which has announced more than 13,100 job cuts since November, won’t grow faster than its competitors until 2016 and is in a “transition year”, Chief Executive Officer Joe Kaeser has said. The 35-year Siemens veteran has spent his two years in the role seeking to focus the former cellphone-, household appliance- and computer-maker on solutions for the manufacturing, and oil and gas industries.

The stock was trading 2.1 percent lower at 83.24 euros as of 10:51 a.m. in Frankfurt, valuing Siemens at 73 billion euros.

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