Siemens Healthineers Cut to Hold as Deutsche Bank Flags Overhang Risk

Key Moments

Deutsche Bank Shifts to Cautious Stance

Investing.com — Deutsche Bank has downgraded Siemens Healthineers to “hold” from “buy,” pointing to a persistent share-price overhang stemming from Siemens AG’s intention to substantially cut its stake in the medical-technology group. Alongside the rating change, the brokerage lowered its price target for the stock to €46 from €57.

Analyst Falko Friedrichs said the revised recommendation reflects anticipated pressure on Siemens Healthineers’ shares as Siemens AG proceeds with its strategy to unwind a large portion of its holding.

Planned Stake Reduction by Siemens AG

Siemens AG currently holds 67% of Siemens Healthineers and is aiming to reduce that position to around 30%. The group plans to achieve this by spinning off a 30% stake. Ahead of this spin, Deutsche Bank expects that roughly 7% of shares could be placed directly into the market.

Timeline Uncertainty and Flowback Concerns

Deutsche Bank highlighted that this restructuring process is likely to extend over a considerable period, as Siemens AG has not set out firm timelines for the reduction of its stake.

The brokerage also warned that the spin may trigger flowback risk, since a substantial volume of stock would be transferred to investors who may decide not to maintain their holdings.

Further Selling Pressure Seen Beyond the Spin

Friedrichs noted that Siemens AG has signaled an eventual ownership target of below 20%, implying that additional on-market share placements could follow even after the planned spin is completed.

Deutsche Bank concluded that this ongoing supply of shares from Siemens AG is likely to restrain Siemens Healthineers’ ability to outperform until the stake-reduction plan has run its course.