Siemens AG (SIE)
Industry: Specialty Industrial Machinery
Direction of analysis: SHORT
The company focuses on automation and digitization in Europe, Africa, Middle East, North and South America, Asia and Australia. It operates through the segments Digital Industries, Smart Infrastructure, Mobility, Siemens Healthineers and Siemens Financial Services.
The company’s shares are part of Ray Dalio’s Short portfolio, mainly because it is European.
The maker of wind and steam turbines and grid solutions said its net loss would widen this year due to Russia’s exit and a bigger-than-expected hit from troubled renewables subsidiary Gamesa.
The company has been hit hard in the crossfire between Germany and Russia over natural gas supplies due to its status as an equipment supplier to Russian gas monopoly Gazprom. Its net loss in the three months to June widened to 533 million euros ($543 million) from 307 million euros a year ago.
SIE 1D CHART
The loss of the key support zone only supports the weakness and poor performance of the company. In the big picture, we have a bounce from the 61.8 fib level that triggered the one-month rally, but the price action suggests uncertainty on the part of investors, characterized by small candles and decreasing Volume as the price rises.
The last 2 sessions we have printed 2 doji candles closing in red, which is an indication of indecision on the part of investors. This move occurs around 100 MA, the diagonal resistance from the descending channel, the 23.6 fib level and the horizontal resistance zone. This build-up of resistance will be difficult to overcome and we are likely to see a move to the downside.
Today the sequential printed an 8, suggesting an impending end to the uptrend.
Demarker is leaving Overbought territory indicating a high probability reversal zone.
Analysts’ expectations for revenue are a slight increase by the end of the year and a hold next year. We have a negative indication from EPS expectations, which signal a drop in EPS into negative territory this quarter.
Adjusted EPS on a daily basis is near historic lows with an indication of further decline. This will pull the price down in the short term.
Analysts’ expectations remain positive, seeing a decline in BUY ratings over the past 2 months and an increase in SELL ratings over the same period. The 12-month price target has been declining over the past 5 months, but remains high with a potential return of around 31%.
Alternatively, a break of horizontal and diagonal resistance would signal an impending trend reversal.
We place the stop loss zone above the horizontal resistance, 100 MA and the diagonal upper limit of the descending channel, measured against the size of the margin account.
Dealer Anatoliy Pavlov