Siemens Healthineers Expanding The Business, But Self-Help Is Still Needed

Since its spin-out from Siemens (OTCPK:SIEGY) in the spring of 2018, Siemens Healthineers (OTCPK:SMMNY) has had a rather lackluster run – underperforming the med-tech space by over 20% before the announced acquisition of Varian (VAR) opened the gap even further. While Siemens Healthineers has a market-leading, and quite profitable, imaging business, investors have been disappointed by the lack of progress in the diagnostics business, and it seems fair to assume that with the need to integrate Varian and do whatever is necessary to ensure the success of that large deal, diagnostics may not get the TLC it needs for a while longer.

With the shares underperforming more significantly since the early August announcement of the Varian deal, a lot of premium has been wrung out of Siemens Healthineers shares. It’s still not significantly undervalued, but I can see the possibility of a mid-to-high single-digit annualized return from this level, and if management can deal more effectively with the issues in the diagnostics business, there could be additional upside.

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Siemens Healthineers Expanding The Business, But Self-Help Is Still Needed