Investing.com -- GE Vernova (NYSE:GEV) has been downgraded to "Hold" from "Buy" by analysts at HSBC, who argue that the energy equipment maker's offshore segment will be a drag on its wind business.
In a note to clients on Friday, the analysts noted that GE Vernova's power and grid gear supply unit will likely benefit from "improving gas turbine demand and secular growth for grid equipment."
They added that GE Vernova's Dec. 10 investor, at which the company is due to provide an updated medium-term forecast, could serve as a potential catalyst for the stock's price.
However, the analysts flagged risks from "higher-than-expected costs to deliver its $3 billion offshore wind backlog."
The comments come after Chief Executive Scott Strazik has warned that the firm's wind segment would lose around $300 million this quarter as it attempts to address the order backlog.
"[W]e believe [GE Vernova] will struggle to find available installation vessels to make up for delayed offshore wind deliveries," the HSBC analysts said.
GE Vernova announced last month that it was planning to reduce the size of its beleaguered offshore wind division, citing the impact of cost inflation and supply chain constraints on the broader sector.
According to Reuters, the cuts could lead to the loss of 900 jobs around the world. It did not say where the cuts would actually happen, Reuters noted.
GE Vernova has also faced delays to two key projects off the coast of Massachusetts and in the UK following issues with its turbine blades.
Shares in GE Vernova were slightly higher in early US trading on Friday. The stock has surged by around 98% so far this year.
The HSBC analysts noted that GE Vernova now has a "high valuation, which implies limited further upside."
(Reuters contributed reporting.)