GE Vernova stock rating upgraded to Buy at Melius on AI demand

Investing.com - GE Vernova (NYSE:GEV) received an upgrade from Melius Research on Monday, with its rating raised from Hold to Buy and a price target set at $740.00. The target sits near the high end of analyst estimates, which range from $280 to $760, according to InvestingPro data.

The upgrade comes as Melius cited improving fundamentals for the power generation company, despite the stock having already risen approximately 400% since its spinoff. The company’s strong momentum is reflected in its impressive 177.84% return over the past year, with revenue reaching $36.62 billion and growing at 8.45%.

Melius highlighted the strengthening artificial intelligence sector as a key driver for GE Vernova’s growth prospects, noting that "the news just keeps getting better" regarding power demand.

The research firm specifically pointed to pricing power as a significant factor, stating that "some of the price increases that follow the demand shock we are experiencing are hard to internalize."

The $740 price target represents 34 times Melius’ 2027 earnings estimate for GE Vernova, but only 20 times its preliminary 2028 forecast, when the firm expects "more of the pricing power starts to show."

In other recent news, GE Vernova has announced a significant transaction, selling its Proficy manufacturing software business to TPG for $600 million, with potential additional proceeds based on future outcomes. This deal will transform Proficy into a standalone entity serving over 20,000 customers in the manufacturing and infrastructure sectors. Additionally, GE Vernova plans to cut 600 jobs across Europe, including 120 in France, as reported by the CFE-CGC and CGT unions.

On the analyst front, UBS reiterated its Buy rating on GE Vernova, maintaining a price target of $760, citing strong growth in the power equipment sector. Goldman Sachs also raised its price target for GE Vernova to $715 from $500, maintaining a Conviction Buy rating despite recent competitive pressures. Jefferies adjusted its price target to $658 from $620, maintaining a Hold rating and noting higher EBITDA estimates due to expected growth in higher-margin services. These developments reflect a period of strategic shifts and analyst confidence in GE Vernova’s growth potential.

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