July 17th, 2024 | 07:30 CEST
Siemens Energy share down 50%? Now time to buy Rheinmetall, Bayer, and Saturn Oil + Gas?
Can the Siemens Energy share halve in value? At least, that is what the analysts at Bernstein think, who have set a price target of EUR 15. After a strong rally, the focus is now back on the Company's problem areas, such as India. Rheinmetall, on the other hand, is recommended as a "Buy". Can the armaments group thus end its sideways movement? In an initial study, analysts see around 50% upside potential for Saturn Oil & Gas. The oil company intends to significantly increase its free cash flow in the coming years but is considered undervalued compared to its peers. Some analysts see even more potential. Analysts are cautious about Bayer shares. In addition to the well-known legal disputes, operational issues are also a burden.
time to read: 2 minutes | Author: Fabian Lorenz
ISIN: RHEINMETALL AG | DE0007030009 , BAYER AG NA O.N. | DE000BAY0017 , Saturn Oil + Gas Inc. | CA80412L8832
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Author
Fabian Lorenz
For more than twenty years, the Cologne native has been intensively involved with the stock market, both professionally and privately. He is particularly passionate about national and international small and micro caps.
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Saturn Oil & Gas: 50% upside potential conservative?
The National Bank of Canada has initiated coverage on Saturn Oil & Gas. In their initial study, the analysts praise the management of the Canadian oil producer for the massive expansion of production volumes through acquisitions in recent years.
Saturn Oil & Gas is now a broadly diversified company with a production of 39.000 barrels of oil equivalent (BOE) per day. This translates into a stable free cash flow for shareholders. The expected further increase in the free cash flow yield due to further growth and debt reduction argues in favour of a rising share price. Saturn aims to produce around 50,000 BOE per day in the medium term.
Saturn Oil & Gas is currently trading at a 1.8x EV/DACF multiple for 2025e. The valuation of the peer group is 2.3x. This discount should resolve over time. Therefore, the stock is included in the coverage with a price target of CAD 4.00. At a current price of around CAD 2.70, this represents a potential upside of around 50%. The analysts see further upside potential if the management continues to pursue its growth and debt reduction strategy. The analysts at National Bank of Canada are therefore rather conservative. Eight Capital recently raised its price target for Saturn Oil & Gas from CAD 4.45 to CAD 7.35.
Rheinmetall: Order intake above expectations?
Analysts also have a positive overall view of Rheinmetall shares. However, after the strong share price performance in recent years, the air is understandably getting thinner. JPMorgan recently issued a "Buy" recommendation ("Overweight"). The order intake in the second quarter is likely to have exceeded analysts' estimates, and the latest long-term orders, such as for the new Panther battle tank from Italy or an ongoing tender for trucks in the US, are not yet sufficiently reflected in the revenue and earnings forecasts. The analysts, therefore, raised their price target for Rheinmetall shares from EUR 600 to EUR 680.
Deutsche Bank is somewhat more cautious. The analysts praised the significant increase in incoming orders, and the outlook for the year as a whole is also likely to be confirmed in the upcoming quarterly report. However, the share has performed well and is not considered cheap. With a price target of EUR 510, the analysts currently see no upside potential.
Bayer: Problems in the agricultural business?
The analysts at UBS were also unable to do more than "Neutral" on Bayer shares this week. Despite a target price of EUR 32, which is a good deal higher than the current level of EUR 26, analysts believe that the DAX-listed company will exceed the market's EBITDA expectations in the specialities segment. In the agricultural sector, however, Bayer could miss market estimates.
Jefferies had previously pointed out the challenging environment in the agricultural sector. The declining revenues from the anticoagulant Xarelto should also not be underestimated. This makes it all the more crucial for Bayer to further reduce costs. Overall, the analysts expect Bayer's earnings in 2024 to reach the lower end of the forecast range at most.
Rheinmetall is currently overwhelmed with orders, but the necessary capacities often must be created first, and the share has already performed very well. Saturn Oil & Gas seems to offer more opportunities at the moment, especially as the Canadian oil company is likely to be one of the winners of a Donald Trump election victory in the US. Cost savings amid numerous legal disputes and operational problems are not compelling reasons to buy a share like Bayer.
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