Siemens at a Crossroads: Radical Restructuring Meets a Valuation Gap

Siemens shares rebound 19% as CEO Busch plans major overhaul, Healthineers spin-off nears, and analysts flag a 20% valuation discount vs. peers.

Siemens shares have quietly climbed back from their spring lows, now trading near €251 — roughly 19% above the trough and comfortably above the 200-day moving average. But the real action is happening behind the scenes. The German industrial giant is preparing for its most sweeping internal overhaul in years, just as analysts flag a compelling valuation disconnect with its peers.

The Great Reorganisation

CEO Roland Busch is moving to dismantle two of Siemens' largest divisions — Digital Industries and Smart Infrastructure — replacing them with six or seven smaller, more agile units. The strategy, dubbed "One Tech Company," aims to break down silos and unite infrastructure, transport, software and artificial intelligence under a single roof. The mobility division, focused on rail technology, will remain untouched.

The plan, first reported by Handelsblatt and confirmed to Reuters by a person familiar with the matter, is expected to be discussed with the supervisory board and worker representatives in May 2026. A capital markets day in the second half of the year is slated to deliver new medium-term targets, potentially including higher margin ambitions for the software business, which has lagged pure-play software companies.

Healthineers Spin-Off Takes Shape

Alongside the internal restructuring, Siemens is pressing ahead with the separation of its medical technology subsidiary. Shareholders will vote on the spin-off at the annual general meeting in February 2027, with Siemens investors set to receive Healthineers shares directly — an unusual transaction structure under German transformation law. Regulatory clearance is underway, though final confirmation is pending.

Bernstein analyst Alasdair Leslie sees the first tangible milestone arriving as early as mid-May, when Siemens could begin reporting Healthineers as a discontinued operation in its quarterly results — an accounting move that would make the core group's value more transparent.

The Valuation Argument

The investment case hinges on a striking discrepancy. Siemens currently trades at roughly 13 times its expected 2027 operating profit, while competitors like Schneider Electric, ABB and Legrand command an average multiple of nearly 19 times. Since the start of the year, Siemens has underperformed this peer group by around 20 percentage points.

Leslie attributes the discount to three exaggerated concerns: fears that AI could disrupt the software business, short-term cyclical risks, and the perceived complexity of the ongoing corporate overhaul. He argues these worries are overblown — and that the gap represents a buying opportunity. Bernstein has raised its price target from €290 to €300, maintaining an "Outperform" rating.

Buybacks as a Catalyst

The current €6 billion share buyback programme is over 90% complete and likely to wrap up in May. Bernstein expects the next programme to be significantly larger — at least €10 billion — funded by operating cash flow and potential partial sales of Siemens' stakes in Siemens Energy and Healthineers.

Q2 Results as a Litmus Test

All eyes are now on May 13, when Siemens reports second-quarter results for fiscal 2026. The first quarter set a solid foundation: revenue rose roughly 8% to €19.1 billion, while order intake climbed 10% to €21.4 billion, pushing the order backlog to a record €120 billion. Industrial profit jumped 15% to €2.9 billion.

Smart Infrastructure stood out with a 22% surge in orders, driven by demand from data centres. The question is whether this momentum can sustain the full-year earnings target of €10.70 to €11.10 per share amid tariff pressures.

The stock currently sits about 4% below its 52-week high of €261.55 and roughly 6% above its 200-day moving average — technical signals that could support the re-rating thesis in the near term. Investors are watching three key variables: potential AI risks to the software business, softening short-cycle demand, and whether the restructuring will create clarity or confusion. The May numbers — and management's communication around the transformation — will determine whether Bernstein's revaluation thesis gains traction.