On Thursday, Goldman Sachs maintained a Buy rating on GE Vernova (NYSE: GEV) stock and increased its price target to $324 from $308. The firm's analysis highlighted that, despite weaker performance in the Wind segment, robust trends in the Power and Electrification segments are driving the company's growth.
GE Vernova reported segment EBITDA of $383 million, which was 8% higher than Goldman Sachs' projections, with Power and Electrification segments surpassing expectations at $499 million and $201 million, respectively.
The Power segment displayed significant organic growth, with a 34% increase in orders, amounting to 5.1 gigawatts, and a 29% rise in service orders. The Electrification segment also showed a strong trend with a 17% organic increase and an equipment backlog valued at $18.6 billion. These gains more than compensated for the 19% organic decline in the Wind segment, which also included a $300 million gain from a canceled Offshore Wind project last year.
Goldman Sachs expressed optimism about GE Vernova's future, especially given the company's role in electrification and decarbonization efforts. The firm anticipates the December 10 investor day to be a pivotal moment for GE Vernova, as new segment level targets for 2028 are expected to be set. Adjusting their EBITDA estimates for 2025 and 2026 to $3,362 million and $4,582 million, respectively, Goldman Sachs reinforced their positive stance on the company.
The revised $324 price target is based on the forecasted free cash flow yield of approximately 3.5% for the fiscal year 2026. Goldman Sachs' assessment suggests confidence in GE Vernova's strategic position and its financial health moving forward.
In other recent news, GE Vernova Inc. reported a mixed bag in its third-quarter results, with revenue exceeding expectations but earnings falling short. The energy technology company posted a loss of -$0.35 per share, significantly under the anticipated $0.24 earnings per share. However, revenue was a different story, coming in at $8.91 billion, surpassing the $8.78 billion projected by analysts and marking an 8% increase year-over-year.
The company's CEO, Scott Strazik, drew attention to GE Vernova's "solid third quarter," which saw double-digit order growth and continued revenue expansion. The company reported total orders of $9.4 billion, up 17% organically, with a significant contribution from a 28% organic increase in services orders across all segments. Notably, the Power and Electrification segments led revenue growth, while the Wind segment experienced some challenges.
Despite the earnings shortfall, GE Vernova reaffirmed its full-year 2024 guidance, expecting revenue to trend towards the higher end of $34-35 billion. The company also anticipates its free cash flow to lean towards the upper end of its $1.3-1.7 billion forecast. CFO Ken Parks highlighted the company's robust cash position, now standing at $7.4 billion.
While the Wind segment reported increased losses due to offshore wind contract issues, Onshore Wind delivered its most profitable quarter in years. Investors can expect an update on strategic capital allocation and the company's multi-year financial outlook at an investor event in December.
InvestingPro Insights
GE Vernova's strong performance and Goldman Sachs' optimistic outlook are further supported by real-time data from InvestingPro. The company's market capitalization stands at an impressive $76.91 billion, reflecting its significant presence in the Electrical Equipment industry. GE Vernova's revenue for the last twelve months as of Q3 2024 reached $34.42 billion, with a quarterly revenue growth of 8.01% in Q3 2024, aligning with the robust trends noted in the Power and Electrification segments.
InvestingPro Tips highlight that GE Vernova holds more cash than debt on its balance sheet, indicating financial stability. This strong financial position could support the company's ongoing initiatives in electrification and decarbonization. Additionally, net income is expected to grow this year, which corroborates Goldman Sachs' positive EBITDA estimates for the coming years.
The stock's performance has been remarkable, with a 113.24% price total return over the past year and trading near its 52-week high. This aligns with the article's mention of Goldman Sachs raising its price target, suggesting continued investor confidence in GE Vernova's prospects.
For investors seeking a more comprehensive analysis, InvestingPro offers 13 additional tips, providing a deeper understanding of GE Vernova's financial health and market position.
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