GE Vernova (GEV), a leading power-generation technology company spun off from GE Aerospace in April 2024, has been on a remarkable run, with shares surging over 200% since its debut.
Despite this impressive rally, Guggenheim analyst Joseph Osha has taken a more cautious stance, downgrading the stock from Buy to Hold in a research note released Friday.
“The easy money has been made,” Osha remarked, indicating that future stock gains may be harder to achieve.
He also withdrew his previous $380 price target.
GE Vernova shares were down by 4.46% at 3:32 pm on Friday at $418.06. This, however, is higher than the average analyst price target of $417.
Invezz finds out how the downgrade fits into the overall sentiment and forecast for the stock:
GEV share price more than tripled since the spinoff
Initially, GE Vernova faced investor uncertainty regarding its profitability and growth prospects.
The spinoff raised questions about how the stock would perform independently of its parent company.
Management, however, proved effective in addressing these concerns, delivering improvements in profit margins and securing new orders at a faster pace than sales.
The results have been striking: GE Vernova shares have more than tripled since April, cementing its status as a standout performer in the energy sector.
But the rapid pace of improvement has raised doubts about whether such growth is sustainable.
Osha highlighted that Vernova shares now trade at roughly 26 times their projected 2026 earnings before interest, taxes, depreciation, and amortization (EBITDA), compared to 10.4 times at the time of the spinoff.
According to him, this elevated valuation makes significant future gains less likely.
Current GEV share price still higher than previous targets
Despite the downgrade, the market reaction to Osha’s note has been relatively muted.
GE Vernova shares were down by 4.46% at 3:32 pm on Friday at $418.06.
One factor tempering the impact of the downgrade is Wall Street’s overall bullish stance on the stock.
According to FactSet data, 74% of analysts covering GE Vernova rate the stock as a Buy, well above the S&P 500 average of 55%.
The average analyst price target for Vernova has also climbed in recent weeks, reaching $417—a notable increase from $380 before the company’s fourth-quarter earnings announcement on January 22.
However, this new target remains below the current share price, underscoring Wall Street’s struggle to keep up with Vernova’s rapid ascent.
GE Vernova’s earnings below expected but company backs 2025 outlook
While GE Vernova’s share price has soared, its latest earnings report revealed a mixed performance.
The company posted $10.56 billion in revenue for the fourth quarter, slightly below the $10.74 billion analysts had anticipated.
Net income came in at $484 million, or $1.73 per share, missing forecasts of $634.5 million, or $2.30 per share.
The wind segment, a key component of GE Vernova’s renewable energy strategy, remains a weak spot.
The division reported EBITDA of just $19 million for the quarter and an annual loss of $588 million.
Management had previously projected that the segment would approach profitability by the end of the fiscal year, a target that now appears elusive.
Nonetheless, GE Vernova reaffirmed its 2025 outlook, forecasting revenue between $36 billion and $37 billion.
Growth in the company’s power and electrification businesses is expected to drive these results, even as challenges in the wind segment persist.
GEV stock: analysts optimistic about future growth areas
Despite near-term challenges, analysts see significant opportunities for GE Vernova in the gas and nuclear power markets.
William Blair analyst Jed Dorsheimer after the company’s earnings announcement that record orders for gas power and electrification technologies have bolstered the company’s prospects.
He also pointed to President Trump’s energy policies as a potential boon for the gas and nuclear segments.
Bank of America analysts echoed this optimism earlier in the week, raising their price target on Vernova to $415 from $380.
They cited rising gas turbine prices as a key growth driver, estimating that prices have grown at a high-single-digit pace since 2019.
Beyond gas turbines, analysts also highlighted opportunities in steam turbines and heat recovery systems, which could further expand Vernova’s footprint in the energy market.
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