GE Vernova up as Evercore ISI initiates shares with “outperform”
Analysts at Evercore ISI began coverage of AI energy play GE Vernova with an “outperform” rating and a price target of $860 on Monday, citing a number of reasons to be bullish about the maker of turbines used for power generation. Evercore’s price target implies gains of roughly 27% for the shares.
Analysts at the shop wrote of GE Vernova:
“1) Growth is strong and well supported by backlog in both Power and Electrification… with visibility into the 2030s. Despite headwinds from a shrinking Wind business, we see 12% CAGR 2026-28E, the strongest growth ex-Siemens Energy in our coverage.
2) Margin is expanding with operating leverage, pricing & productivity in both Power & Electrification. Full ownership of Prolec should drive another step up in estimate revisions upon closing (mid-2026). The equipment dynamics (pricing, margin expansion) should repeat in the service business 2030+.
3) Shareholder returns are very well supported, with EBITDA margins rising from 7% in 2024 to 21% in 2028 and FCF of >$5bn pa on average — recent buyback upgrade to $10bn (vs. $6bn prior) and dividend increase amplify an already attractive growth algorithm.”
There are some risks to the rally for the shares, which have more than doubled this year. For instance, the company’s struggling wind power division could weigh on results. Also, the high valuations on the stock — its forward price-to-earnings ratio is roughly 55x — make it vulnerable to rapidly shifting investor vibes toward AI, analysts say.
“Investment sentiment is tied up in the AI/Data centre cycle, so any suggestion of delays or diminished energy demand would weigh on the stock as investors would fear over-capacity,” they noted.
