Street Calls of the Week
On Tuesday, JPMorgan analyst Mark Strouse reaffirmed an Overweight rating and a $460.00 price target for GE Vernova (NYSE:GEV), emphasizing the potential of the company’s Electrification segment. The stock, currently trading near its 52-week high of $447.50, has delivered an impressive 177.9% return over the past year. According to InvestingPro data, the broader analyst consensus remains strongly bullish, with price targets ranging from $279.12 to $525.00. According to Strouse, this segment is likely the most underappreciated aspect of GE Vernova’s business, yet it could provide substantial upside to the firm’s financial guidance for fiscal year 2025 and near-term consensus expectations.
Strouse’s analysis highlights the Grid Solutions business as the fastest-growing within GE Vernova’s portfolio. This includes transformers, high-voltage direct current (HVDC) solutions, and other grid equipment products, which make up about 90% of the segment’s equipment backlog. The analyst notes that GE Vernova has managed to grow its backlog significantly over the past two years, outpacing competitors and benefiting from a pricing environment favorable to grid equipment.
The Electrification segment, Strouse points out, has greatly benefited from GE Vernova operating as an independent entity. With a substantial market capitalization of $121.89 billion and trailing twelve-month revenue of $35.71 billion, GE Vernova has established itself as a prominent player in the Electrical Equipment industry. There is a belief that many potential customers are still not fully aware of the segment’s offerings, which presents an opportunity for GE Vernova to increase its market share. Additionally, the demand for gas equipment is seen as creating cross-selling opportunities, especially for the company’s grid equipment and software solutions.
Strouse also sheds light on the company’s large HVDC pipeline, which is estimated to represent approximately $7-8 billion of the company’s backlog. This, he believes, will be a key driver of growth for GE Vernova in the coming decade, especially with the high demand for such solutions in Europe and potentially other markets.
While the Electrification software segment currently accounts for just around 3% of GE Vernova’s overall revenues, Strouse believes that successful adoption by core utility customers could contribute to growth and margin expansion in the future.
The analyst concludes by presenting an analysis that suggests the Electrification equipment backlog could convert at a rate of about 30% in fiscal year 2025, which would exceed current management guidance and consensus expectations. Based on InvestingPro analysis, the stock currently appears overvalued relative to its Fair Value, though it maintains a "GREAT" overall financial health score. Investors seeking deeper insights can access comprehensive analysis and 15 additional ProTips through the detailed Pro Research Report, available exclusively to InvestingPro subscribers. The Electrification segment is viewed as the most probable area for outperformance relative to the FY25 guidance, though estimates remain cautious as the impact of tariffs on the segment is yet to be fully detailed.
In other recent news, GE Vernova reported impressive financial results for the first quarter of 2025, with earnings per share (EPS) of $0.91, significantly surpassing the forecasted $0.63. The company achieved a 15% year-over-year increase in revenue, reaching $10.2 billion. This strong performance was further highlighted by a 70% increase in adjusted EBITDA to $460 million and a substantial improvement in free cash flow, totaling $1 billion. Following these results, Mizuho (NYSE:MFG) Securities raised its price target for GE Vernova to $385, maintaining an Outperform rating, while JPMorgan increased its target to $430, citing strong results in the Power and Electrification segments.
In another development, Prolec GE, a joint venture involving GE Vernova, announced a $140 million investment to expand its transformer production in North Carolina, aiming to double output by 2030. This expansion is expected to create over 330 full-time jobs. Additionally, GE Vernova’s shareholders approved executive compensation and elected directors during the annual meeting. Deloitte & Touche LLP was ratified as the independent auditor for the fiscal year ending December 31, 2025.
These recent developments underscore GE Vernova’s strategic growth and operational achievements. The company’s ongoing share buyback program, which included $1.5 billion returned to shareholders this year, further emphasizes its commitment to enhancing shareholder value.
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