Siemens ?accumulate?

22.05.07 - AC Research

LONDON, May 22 (newratings.com) - Analyst Henning Wagener of AC Research reiterates his "accumulate" rating on Siemens AG (SIE).

According to AC Research?s research note dated May 21 and published this morning, the company has found a successor for the departing president of its board, Dr. Klaus Kleinfeld. From July 1, 2007, Peter Löscher will succeed Dr. Klaus Kleinfeld as president of Siemens? board. Accordingly, Dr. Klaus Kleinfeld will leave Siemens? board by June 30. Currently, Mr. Löscher serves as President Global Human Health at Merck & Co Inc. Prior to his position at Merck & Co, he worked for Höchst AG and Aventis in various functions in Germany, the UK, Spain, Japan, and the U.S.

The analyst considers the appointment of Löscher as a positive development. Siemens was able to quickly find a competent successor for Dr. Kleinfeld. Mr. Löscher has a global background, a very positive international reputation, and vast experience in the development of strategies and with respect to the financial markets and technology issues. At the same time, the analyst expects Mr. Löscher to be an open-minded crisis manager, who would continue to pursue the incorporation of the "Fit for 2010 Programme." Moreover, Siemens? supervisory board appointed Heinrich Hiesinger as successor of Siemens? Europe boss, Johannes Feldmeyer.

At a closing price of ?92.54 on Friday and a 2007/2008 P/E ratio of about 14, the company?s stock still seems to enjoy a rather moderate rating, considering the progress Siemens has made in operations so far. One of the crucial tasks of the new CEO will also be to navigate Siemens through the continuing bribery affair. In this context, it is a favourable factor that Siemens found its new CEO outside the company, since Mr. Löscher will not be concerned by corruption and antitrust investigations, the analyst says. A rapid conclusion of the bribery affair seems rather improbable though. Moreover, an expansion of the scandal may not be excluded. This might have a negative impact on the business, which constitutes the major risk factor for the company?s performance going ahead.

AC Research reiterates its "accumulate" rating on Siemens.