On January 12, Citi adjusted its estimates and price targets for its industrials group coverage as part of its Q4 outlook review. The firm raised its price target on GE Vernova Inc. (NYSE:GEV) from $658 to $708 while maintaining a Neutral rating. This implies a 10% upside.
Before Citi, Robert W. Baird analyst Ben Kallo downgraded the stock to Neutral from Outperform. He lowered the price target to $649, down from $816 earlier.
GE Vernova's stock has rallied during the last year, but its outlook has been soured by concerns about power capacity oversupply. Kallo mentioned in his note that these concerns are "shifting sentiment" on the company. Some in the market believe demand for GEV's turbines and other equipment was mostly driven by AI-led growth. They think the company will be affected if tech companies can't turn AI into the future success it is currently estimated to be.
However, GE Vernova believes such concerns don't capture the full picture. At its recent Investor Day event, the company's Chief Executive Officer, Scott Strazik, addressed these concerns. He said, "AI is a real driver for us right now, but it isn't the only driver."
In early December, the company provided a robust outlook. It projected its total order backlog to reach about $200 billion by the end of 2028, up from $135 billion, according to a Bloomberg report. The company also guided for better profit margins in its power and electrification unit. It raised expectations for dividends and buybacks.
Following the update, several analysts reiterated their confidence in the stock. JPMorgan raised its price target substantially from $740 to $1,000 and maintained its Buy rating.
GE Vernova Inc. is a purpose-built global energy company. It is a leader in the electric power industry, offering products and services that generate, transmit, convert, and store electricity. The company has three business segments: power, wind, and electrification.