TLDR
- Morgan Stanley removed Siemens Energy from its top picks list but kept its Overweight rating with a €166 price target
- The bank flagged the Gas Services division’s heavy reliance on Middle East orders, particularly from Saudi Arabia
- The Middle East accounted for 35% of new gas turbine order intake in 2025, with total regional exposure of €9 billion
- Morgan Stanley warned of potential revenue delays in both Gas and Grid divisions if site access becomes restricted
- The bank still forecasts 26% EBITA compound annual growth from 2026–2030, but its forecast is only 3% ahead of consensus
Morgan Stanley has pulled Siemens Energy from its list of top stock picks, sending the German industrial group’s stock down over 5%. The bank cited growing concerns about the company’s exposure to the Middle East as regional tensions continue to rise.
The U.S. bank kept its Overweight rating on the stock and held its price target at €166. But it said the current geopolitical situation calls for a more cautious near-term view.
The core concern is Siemens Energy’s Gas Services division, which has leaned heavily on Middle East demand. Saudi Arabia alone accounted for roughly 3.6 gigawatts and 4 gigawatts of orders in the second and third quarters of fiscal 2025, out of around 9 gigawatts each quarter.
According to McCoy data cited by Morgan Stanley, the Middle East made up 35% of Siemens Energy’s new gas turbine order intake by capacity in 2025. The company itself put its total Middle East and Africa order exposure at €9 billion — around 15% of its total order book.
Gas and Grid Divisions in the Crosshairs
Beyond new orders, the bank warned of potential revenue slippage in both the Gas and Grid divisions. If access to customer sites becomes restricted, aftermarket revenues could be hit and equipment deliveries delayed.
“Events in the Middle East remain fluid, but we think it unlikely that Siemens Energy’s Gas Services orders, or revenues, will remain entirely unaffected,” Morgan Stanley analysts wrote.
The bank also raised a secondary concern: if Middle Eastern governments redirect spending toward defense, decisions on future gas turbine orders could be pushed out.
The removal also shows how much the stock’s story has changed in just over a year. Morgan Stanley first made Siemens Energy its top pick in March 2025. Since then, its 2028 group EBITA forecast has jumped from €6.2 billion to €9 billion, and its Gas Services EBITA margin assumption has risen from 15% to 21%.
The stock’s valuation has tracked that upgrade cycle. It went from trading at a 35% discount to European capital goods peers on a 2028 EV/EBITA basis to a 10% premium.
A High Bar Now Set for Positive Surprises
That re-rating leaves less room for upside from here. Morgan Stanley now sits just 3% ahead of consensus on its 2028 EBITA forecast — a tight margin that limits the scope for positive surprises.
The bank said new orders, especially in the Gas division, are the key metric the market is watching in 2026.
Morgan Stanley still forecasts a 26% EBITA compound annual growth rate for Siemens Energy between 2026 and 2030, backed by a large order backlog.
Siemens carries a market cap of $175.88 billion, a P/E of 21.23, and a debt-to-equity ratio of 86.23.
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