Wolfe Research Coverage of GE Vernova

Wolfe Research initiated coverage of GE Vernova with an Outperform rating and a year-end 2025 price target of $403. Analysts emphasized that although the stock has shown impressive returns since its spin-off from General Electric (NYSE:GE), there is still significant upside.

Key Highlights:
– Wolfe analysts noted that GE Vernova serves as a crucial indicator of accelerating electricity demand, highlighting its role as the leading supplier of power equipment and services.
– The firm cited sustained above-average growth potential driven by electrification trends and operating margin and free cash flow (FCF) flexibility.
– Despite trading at 51x forward earnings and 26x EBITDA, Wolfe indicated that current valuation reflects GE Vernova's early-stage earnings ramp, with meaningful earnings power anticipated by 2027. By that time, analysts expect the stock to trade at 11x its 2027 estimated EBITDA, compared to 16x for the broader large-cap peer group.
– Upcoming catalysts include GE Vernova's second investor event on December 10, where expectations for management to improve medium-term outlook are high.
– Analysts anticipate potential updates to include raising 2028 sales growth projections from mid-single-digit to high-single-digit compound annual growth rates and enhancing EBITDA margin targets from 10% to the mid-teens.
– Improvement is anticipated due to productivity gains, pricing power, and reduced losses in the offshore wind segment.
– Wolfe also sees significant capital return potential, supported by GE Vernova's strong balance sheet, which features $7 billion in net cash. FCF is expected to grow from $2 billion in 2024-2025 to $4-6 billion annually by 2026-2028.

In summary, analysts view GE Vernova as a unique investment opportunity, leveraging powerful electrification themes with prospects for growth and margin expansion that exceed current market expectations.