Key Takeaways
- GE Vernova shares rose Wednesday after receiving a “buy” rating from Jefferies analysts who said the company is well-positioned to benefit from increasing demand for power.
- The analysts called GE Vernova a “top-3 player” in the industries it operates in, from wind to gas and electricity.
- The Jeffreries analysts said the spike in demand for power for facilities like data centers has made it a “seller’s market,” which can boost GE Vernova’s future earnings.
GE Vernova (GEV) shares rose Wednesday as the power company received a “buy” rating from Jefferies analysts, who said the company is “uniquely positioned” to benefit from the surging demand for power across the globe to power facilities like data centers.
The analysts highlighted GE Vernova’s position as a “top-3 player” in each of the sectors it operates, from wind turbines to natural gas-powered turbines and electrification. They initiated their coverage of GE Vernova with a “buy” rating, with a price target of $261, just over 30% above its current price.
GE Vernova To Benefit From ‘Seller’s Market’ Amid Soaring Power Demand
“A sudden increase in the demand for power has left the supply chain squarely in a seller’s market position, with margins looking poised to recoup years of cumulative losses,” the analysts wrote in a note published late Tuesday.
In recent conversations with executives, the analysts said GE Vernova plans to prioritize the profitable parts of its wind business, as it is the only one of GE Vernova’s three segments that has been unprofitable in its two-plus quarters as a public company.
The focus will likely shift to GE Vernova’s onshore wind projects in North America, while “shelving” less profitable projects like offshore wind turbines and some of its international efforts, the analysts said.
Analysts Speculate About Start of Dividends
The analysts also highlighted the possibility of the company introducing dividends or stock buybacks to assure investors of their positive cash-flow position, but noted that investments in making its wind business profitable will likely take priority before those measures could be introduced.
GE Vernova became a public company earlier this year, when General Electric completed its split into three companies and GE Vernova was spun off from GE Aerospace (GE).
GE Vernova shares finished 3.7% higher at $199.63 Wednesday, about 40% above where they ended their first day of trading in April.