On Monday, BofA Securities adjusted its price target for GE Vernova (NYSE:GEV) shares, increasing it to $160 from the previous $150, while maintaining a Neutral rating on the stock.
The revision follows GE Vernova's first-quarter adjusted EBITDA, which reached $189 million, surpassing consensus expectations by $113 million and the firm's own estimates by $87 million. This significant beat was attributed to better-than-anticipated margins.
The company's Onshore Wind business experienced a 26% year-over-year decline in revenue, which was anticipated as GE Vernova phases out its less profitable international operations. Despite this, the existing backlog for Onshore Wind is expected to contribute to a revenue increase in the second half of 2024. With a book-to-bill ratio of 1.33, GE Vernova demonstrates that demand continues to grow.
The analyst from BofA Securities highlighted the company's overall performance and future prospects. Despite the wind-down in certain areas, the firm sees potential for revenue acceleration later in the year.
The price target increase reflects a change in the enterprise value to EBITDA (EV/EBITDA) multiple from 12x to 13x based on the 2025 estimates, aligning it with the 13x average multiple of peers for 2024. This change is justified by GE Vernova's expected above-average growth, even as the company works to improve its below-average margins.
InvestingPro Insights
Following the recent updates from BofA Securities on GE Vernova, InvestingPro data and tips shed further light on the company's financial health and market performance. With a market capitalization of $41.65 billion and a significant revenue growth of 6.41% in the last quarter, GE Vernova stands as a noteworthy player in the Electrical Equipment industry. Despite the company's net income being negative over the last twelve months, analysts are optimistic, predicting that GE Vernova will be profitable this year, which aligns with the positive outlook from BofA Securities.
Investors should note that GE Vernova's stock is trading near its 52-week high, with the price at 97.3% of this peak. This could be indicative of strong market confidence, as also reflected by the substantial returns over the last week, month, and three months, all hovering around 16.62%. Additionally, the InvestingPro Tips highlight that GE Vernova holds more cash than debt, which could provide financial flexibility and stability for the company.
For those looking to delve deeper into GE Vernova's prospects, there are additional InvestingPro Tips available, including insights on valuation multiples and industry comparisons. To explore these further, consider using the coupon code PRONEWS24 for an additional 10% off a yearly or biyearly Pro and Pro+ subscription, and stay informed with the comprehensive analysis that InvestingPro offers. There are 11 more InvestingPro Tips listed for GE Vernova, providing a richer understanding of the company's financial and market position.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.