GE Vernova Inc. (NYSE:GEV) shares are trading lower today. Mizuho analyst Maheep Mandloi initiated coverage with a Buy rating and price target of $154.
The analyst says that GE Vernova benefits from leadership in the gas power business (generating recurring and increasing cash flow), margin expansion in the wind business (led by pricing power), an unprofitable offshore backlog ending by 2026, and a strong presence in grid services and electrification.
In particular, Mandloi estimates EBITDA for the Power business of ~$2 billion in 2024 (~93% of group EBITDA), rising at an 8% CAGR 2024-2026, aided by services growth (75% of power revenue).
The analyst sees potential optionality for turbines using hybrid or zero-carbon fuels.
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Moreover, the analyst projects Wind business EBITDA to grow to ~$1 billion in 2026, from -$(0.2) billion in 2024.
Apart from this, Mandloi projects GEV’s electrification revenue to grow at an 11% CAGR from 2023-2026 and segment EBITDA to reach $0.5 billion in 2026.
Moreover, the analyst expects AI/data center demand to potentially increase U.S. gas and wind segment demand by over 5%-10% and 10%-15%, respectively, by 2030.
Overall, the analyst projects the company to attain a 10% Adjusted EBITDA margin by 2026 (vs 1.7% in 2023), much earlier than guidance of 2028.
Earlier this month, GE Aerospace (NYSE:GE) disclosed the official launch as an independent public company following the completion of the spin-off of GE Vernova.
Price Action: GEV shares are down 2.13% at $131.14 on the last check Monday.
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