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Investing.com -- Morgan Stanley has identified two standout renewable energy stocks that deserve investors’ attention in the current market environment. Both companies are positioned to exceed their previously announced mid-term targets, suggesting potential upside for shareholders as the energy transition continues to accelerate.
1. GE Vernova
Morgan Stanley expects GE Vernova to significantly raise its 2028 consolidated EBITDA margin guidance from 14% to approximately 18%, representing a 400 basis point increase. The bank also anticipates the company will increase its consolidated revenue guidance to $50 billion, up from the current $45 billion target. This would imply roughly $9 billion of EBITDA based on the new guidance, slightly above the current consensus of $8.8 billion.
The primary drivers behind this optimistic outlook are strength in both the Power and Electrification segments. At the segment level, Morgan Stanley expects GE Vernova to raise its 2028 Power EBITDA margin outlook to 20% from 16%, and similarly increase Electrification segment margins to 20% from 16% by 2028. The Electrification segment projection represents approximately 500 basis points higher than what is expected for 2025.
In a recent development, GE Vernova reported strong operating results and raised its full-year guidance, citing performance in its Power segment. Following the report, several firms updated their views, with BMO Capital and Jefferies raising their price targets, while Guggenheim downgraded its rating on the stock to Neutral.
Morgan Stanley anticipates Siemens Energy will increase its group 2028 EBITA margin guidance to 13-15%, up from the current 10-12% range. The bank expects the company to maintain its group organic revenue CAGR at high single digit to low double digit, while likely increasing the growth guidance for the Gas services division to low double digit.
The new 2028 EBITA margin guidance range of 13-15% would imply 2028 EBITA of €7.3 billion, which is 11% ahead of the current consensus estimate of €6.6 billion. Key drivers for this guidance upgrade include Gas EBITA margins moving to 16-18% (from 12-14%), implying continued margin expansion of approximately 150 basis points per year from 2026-2028, and 2028 Grid margin guidance increasing to 17-19% (from 13-15%).
For context, Siemens Energy is already expected to generate Grid margins of 16% in 2025, or 15% excluding positive one-offs, with the new guidance suggesting further margin improvement of about 100 basis points annually through 2028.
Siemens Energy received a price target increase from Deutsche Bank recently, which maintained a Buy rating on the stock. The bank highlighted the company’s position in power generation and transmission markets, noting the rise of AI data centers as a potential opportunity.
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