Drumbeats and Buy recommendations: Siemens Energy, SAP, Cardiol Therapeutics

Cardiol Therapeutics: Analysts expect share price jump with positive trial results

The analysts at First Berlin have reiterated their "Buy" recommendation for Cardiol Therapeutics shares. The price target is USD 3.60. The shares are currently trading at around USD 1.12. The experts believe that Cardiol shares have an upside potential of over 200%. Cardiol Therapeutics focuses on researching and developing therapies for cardiovascular diseases. The Company is well financed to implement its development strategy. At the beginning of the upcoming quarter, experts expect Cardiol to publish positive data from the ongoing Phase II pilot study of CardiolRx™ for the indication of recurrent pericarditis - inflammation of the pericardium. Patients from eight heart centers in the US are participating in the study. These sites include the renowned Cleveland Clinic, Massachusetts General Hospital and the Mayo Clinic. Shortly after the positive data, FDA approval for the Phase III trial could be granted, which should trigger a jump in the share price.

In addition, the international Phase II trial to prove the efficacy of CardiolRx™ in acute myocarditis (inflammation of the heart muscle) is also being driven forward. The recruitment rate rose over 50% in January 2024, therefore Cardiol is well on track to recruit all the patients it needs by the beginning of the third quarter of 2024 and to publish initial results before the end of the year.

Important for research-based biotech companies is the cash position; in this regard, Cardiol is in a solid position. At the end of the third quarter 2023, the Canadians had cash and cash equivalents of more than CAD 40 million. That corresponds to around 40% of the market capitalization. Cardiol should, therefore, be fully financed for the coming years.

SAP: Expects more than analysts

SAP has made a significant announcement, revealing plans to focus even more on AI and exceed analysts' earnings expectations by 2025. To this end, a transformation program has been announced. This year, SAP intends to focus even more strongly on key strategic growth areas, particularly AI for companies. The operational structures are also to be redesigned in order to exploit organizational synergy effects, achieve efficiency gains through AI and prepare the Company for highly scalable future revenue growth. Around 8,000 employees will be directly affected by the measures. They will be offered voluntary programs and internal retraining measures. The number of employees is not expected to change until the end of 2024. The restructuring costs are provisionally expected to amount to around EUR 2 billion and will largely be recognized in the first half of 2024.

Due to the strong performance in the fourth quarter of 2023, the updated non-IFRS definition of earnings measures and the expected benefits from the transaction program, SAP is also revising its forecasts for 2025. In the coming year, SAP aims to achieve an operating profit (non-IFRS) of around EUR 10 billion and a free cash flow of EUR 8 billion. Both targets exceed the consensus estimates of analysts.

Siemens Energy: Gamesa with less loss than expected

Siemens Energy has also surprised investors with an ad hoc announcement. The ailing company has announced preliminary figures for the first quarter of the 2023/24 financial year. The preliminary financial results are above market expectations. The Gas Services, Grid Technologies and Transformation of Industry divisions, in particular, are developing positively.

Overall, Siemens Energy expects the market environment to remain positive. The Group is, therefore, maintaining its forecast for the full year 2023/24. Comparable revenue growth (excluding currency translation and portfolio effects) is expected to be between 3% and 7%. The earnings margin before special items is expected to be between -2% and 1%.

In the first quarter, sales rose from EUR 7.1 billion to EUR 7.6 billion compared to the same period of the previous year. Analyst consensus estimates were at EUR 7.4 billion. Earnings before special items improved from EUR -282 million to EUR 208 million. Analysts had expected EUR -106 million.

It is also interesting to look at the weakening subsidiary Siemens Gamesa, where earnings before special items amounted to an impressive EUR -426 million, but this was better than the EUR -576 million expected by analysts.

Yesterday's jump in the share price of Siemens Energy shows that the figures were well received. The development at Siemens Gamesa may not be as catastrophic as initially assumed. In addition, the other divisions seem to be doing well. The focus of SAP on Cloud and AI is going down well with investors. Although there are higher costs in the current year, it should pay off in the coming year. Investors may still need a little patience with Cardiol. However, with positive study results, there could be a quick and significant upward movement.