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GE Vernova (NYSE:GEV) -2.2% in Monday’s trading despite winning a new Buy rating and $154 price target from Mizuho Securities, which expects the company will approach a 10% adjusted EBITDA margin by 2026, much earlier than guidance for FY 2028.
Mizuho analyst Maheep Mandloi says he favors the GE spinoff because it “benefits from leadership in the gas power business that generates recurring and increasing cash flow, margin expansion in wind due to pricing power and an unprofitable offshore backlog ending by 2026, and its strong presence in grid services and electrification.”
GE Vernova’s (GEV) overall EBITDA margin in 2023 was ~2%, and the gas turbine business is the company’s most profitable unit, with an EBITDA margin of ~10% in 2023, while its wind business – which is suffering for everyone – generated a 2023 EBITDA margin of negative 11%.
Mandloi’s $154 stock PT works out to ~14x his estimate for 2025 EBITDA/share and compares with ~13% for the S&P 500 for the same year, and the analyst says GE Vernova (GEV) deserves a premium because margins are continuing to move higher.
GE Vernova (GEV) began trading on the NYSE on April 2, and most analysis coverage has been favorable.
