S&P Downgrades Siemens AG (SI) From Buy to Hold

S&P downgraded German industrial conglomerate, Siemens AG SI from Buy to Hold, yesterday. Today, Societe Generale also cut the stock to a Hold. Siemens is currently trading up a fraction. The Economist Magazine recently wrote a favorable article about Siemens AG, but mentioned that analysts were skeptical that the positive momentum at the company would last. Here are a few quotes from the S&P report: “We downgrade Siemens to Hold from Buy but maintain our SOTP-based 12-month target price of EUR85 (despite slashing our fiscal-year 2010 EBIT forecast) after an 8-10% rally in the share price in Sept and recent developments in the Energy and Healthcare divisions. In Energy we understand supply-chain, design-to-cost initiatives will not fully offset a mere 2% price deterioration year-over-year in fourth-quarter (mostly T&D, renewables) despite good volumes/execution, hence a margin squeeze is likely to tighten (7% price deterioration already signalled in order intake). In Healthcare, the recent EUR1.4 billion impairment suggests to us some downward revision of growth prospects for the central lab segment (5% CAGR forecast as of 2007 on Healthcare acquisitions, already the lowest growth potential in the diagnostic universe). / V. Vacca”