GE Vernova Inc. (GEV) is a diversified power and energy company involved in the generation, transfer, conversion, and storage of electricity. It operates through three main segments: Electrification, Wind and Power. Formerly known as GE Power and GE Renewable, the two business units were merged and subsequently spun off from the conglomerate formerly known as General Electric earlier this year, and GEV went public in April.
Valued at $92.4 billion by market cap, Cambridge, Massachusetts-based GEV is a member of the S&P 500 Index ($SPX). The spinoff stock has been remarkably hot this year, particularly with industry groups boosting their forecasts for power usage amid the artificial intelligence (AI) data center boom.
GEV stock is up 88% over the past six months, easily outperforming the broader S&P 500. The stock hit an all-time high above $357 as recently as Nov. 21, and closed last week above its average price target from analysts.
GE Vernova Beats Q3 Estimates
Ge Vernova reported its third-quarter earnings results on Oct. 23, posting a loss of $96 million, or $0.35 per share. On an adjusted basis, GEV's profit of $0.35 per share surpassed the average analyst estimate of $0.22 per share. Likewise, revenue of $8.91 billion topped the consensus.
However, adjusted EBITDA of $243 million fell short of the $249 million consensus, as weakness in the wind segment offset a strong showing for electrification.
Q3 revenues for electrification were up 22% to $1.9 billion, and the segment produced a profit of $198 million during the period - sharply higher than last year's $57 million. Profit margins for grid electrification expanded to 10.2% from 3.6% in the year-ago period.
Conversely, wind revenue was flat at $2.9 billion year over year, with the segment posting a $306 million loss for the quarter.
For the full year, management expects revenue in the range of $34 billion to $35 billion, with EBITDA expected to arrive between $1.7 billion and $2.4 billion. At the midpoint, that's just slightly short of the Wall Street consensus for $34.9 billion in revenue on $2.1 billion in EBITDA.
Analysts Say GEV is a ‘Strong Buy’
The energy grid stock is highly rated, with a “Strong Buy” consensus on Wall Street among 23 analysts.
Given its breakout price action, GE Vernova stock already trades above its average price target of $320.14 from analysts. However, some GEV bulls see more upside in store.
Recently, Wells Fargo analyst Michael Blum initiated coverage of GEV with an “Overweight” rating, predicting that the company will benefit from growing power demand and electrification trends. Plus, Blum sees GEV's EBITDA margins benefiting from an increasing shift away from its parent company's layers of bureaucracy, which should decrease general & administrative expenses.
The analyst set a price target of $385 for GEV, indicating the stock can rise another 15% from here. The Street-high target of $410 implies a premium of 22.6%.
