Evercore bullish on GE Vernova shares as 2028 EBITDA margin target raised to 14%

Wednesday, Evercore ISI adjusted its price target for GE Vernova (NYSE: GEV), lifting it to $390 from $385, while maintaining an Outperform rating on the shares. The company, currently valued at $92.4 billion, has demonstrated remarkable market performance with a 149% return over the past year.

According to InvestingPro data, analyst consensus remains strongly bullish with price targets ranging from $212 to $420. The adjustment follows GE Vernova's recent Investor Update where the company revised its long-term adjusted EBITDA margin targets upward and provided details on its capital allocation strategy and the expected timing for its Offshore Wind equipment backlog.

During the update, GE Vernova increased its 2028 adjusted EBITDA margin guidance to 14%, up from the previous 10%. This represents significant growth potential from the current EBITDA of $1.4 billion. InvestingPro analysis shows the company trading at an EV/EBITDA multiple of 60.6x, reflecting high growth expectations. This aligns with Evercore ISI's projections and sets a new floor for the company's financial ambitions.

Alongside this, GE Vernova anticipates generating approximately $14 billion in cumulative free cash flow from 2025 to 2028. The company plans to return at least one-third of this to shareholders through dividends and share repurchases, with a $0.25 per share quarterly dividend starting in the first quarter of 2025 and a $6 billion share buyback authorization announced.

The company also outlined its investment strategy for organic growth, committing to approximately $9 billion in cumulative spending through 2028, which includes around $4 billion on capital expenditures and about $5 billion on research and development. Despite a slight dip in the share price following the announcement, attributed to a narrowed immediate-term margin guidance of 5.5%-6% for FY24, Evercore ISI remains positive on GE Vernova's execution capabilities.

InvestingPro subscribers can access a comprehensive analysis of GE Vernova's financial health, which currently rates as "GOOD" based on multiple factors including profitability, momentum, and cash flow metrics. The platform offers 13 additional exclusive ProTips and detailed valuation metrics in its Pro Research Report.

Evercore ISI suggests that the company's financial update not only meets but also provides clear pathways to exceed its new adjusted EBITDA margin target, indicating strong potential for growth and margin expansion in the upcoming quarters and years. This outlook underpins the firm's reiteration of its Outperform rating for GE Vernova shares.

In other recent news, GE Vernova has announced a projected revenue target of $45 billion by 2028, reflecting confidence in its growth trajectory.

This projection comes alongside the company's plans to invest around $4 billion in capital expenditures and $5 billion in research and development through 2028. Furthermore, GE Vernova anticipates generating at least $14 billion in cumulative free cash flow from 2025 to 2028.

In recent analyst notes, Truist Securities raised its price target for GE Vernova to $400, citing strong demand for the company's gas power and electrification segments. TD Cowen initiated coverage with a Buy rating and a $400 price target, highlighting the company's successful turnaround and potential benefit from increased investment in the electricity supply sector. Meanwhile, Guggenheim maintained a Buy rating and increased the price target to $400, citing underestimated free cash flow generation.

Despite mixed third-quarter results, with revenue surpassing expectations but earnings falling short, GE Vernova reaffirmed its full-year 2024 guidance, projecting revenue to trend towards the higher end of $34-35 billion. The Board of Directors declared a quarterly dividend of $0.25 per share, payable in the first quarter of 2025 to shareholders of record as of December 20, 2024. The board also approved an initial $6 billion share repurchase authorization, emphasizing a commitment to shareholder returns.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.