Zinger Key Points
- Bank of America raises GE Vernova's price target to $485, reiterating a Buy rating after strong Q4 results.
- Orders exceeded expectations, though increased R&D and turbine spending impact Q1 EBITDA guidance.
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BofA Securities analyst Andrew Obin raised the price target of GE Vernova Inc. GEV to $485 from $415 while reiterating the Buy rating.
Yesterday, the company reported revenue growth of 5% year-over-year to $10.559 billion and +9% organically, missing the consensus of $10.78 billion. Earnings per share for the quarter were $1.73, compared to $0.72 a year ago, missing the consensus of $2.55.
GE Vernova reaffirmed its 2025 outlook with $36 billion – $37 billion in revenue versus a consensus of $36.88 billion, a high single-digit adjusted EBITDA margin, and $2 billion – $2.5 billion in free cash flow.
The analyst writes that the results were solid. Orders reached $13.2 billion, surpassing the prior $12.2 billion consensus, which likely drove the positive stock reaction.
However, the quarter had some drawbacks, including previously announced increases in R&D and capacity spending. Additionally, management plans to invest $100 million in 2025 to enhance onshore turbine uptime in the Wind segment, adds the analyst.
The analyst says that first-quarter guidance suggests ~$0.3 billion in adjusted EBITDA, below the prior $0.5 billion consensus, mainly due to the timing of cost additions.
The analyst adds that GE Vernova continues to benefit from the electricity and grid investment cycle, which appears to extend beyond 2030.
Obin lowered 2025 adjusted EBITDA forecast to $3.5 billion and sees revenue of $37.1 billion vs. guidance of $36 billion-$37 billion.
For 2026, the analyst projects 6% Y/Y organic revenue growth to $39.3 billion.
For the first quarter of FY25, Obin forecasts 6% Y/Y organic revenue growth to $7.4 billion, with an adjusted EBITDA estimate of $0.3 billion.
Investors can gain exposure to the stock via Invesco S&P Spin-Off ETF CSD and TCW Transform Systems ETF NETZ.
Price Action: GEV shares are up 3.91% at $443.79 at the last check Thursday.
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