Powering the Future, But With Caveats
GE Vernova, a $70 billion industrial giant spun off from General Electric, has seen its stock nearly double since its March debut. Wall Street analysts are bullish, citing strong demand and a robust backlog. However, some concerns remain.
GE Vernova provides parts, maintenance, and technology to diverse power plants, claiming to power 30% of the world's electricity. Its revenue is split between products and services, with gas currently dominating.
While the Power segment drives profits, the Wind segment is loss-making but improving. Encouragingly, the company's remaining performance obligations (RPOs) stand at a massive $116 billion, indicating strong demand.
Analysts are optimistic, with price targets suggesting a potential 17% increase. However, the average target implies a 11% downside.
Challenges include the company's limited involvement in clean energy and the uncertainties surrounding hydrogen-powered gas turbines. Additionally, the scaling back of the wind business raises concerns.
Despite these caveats, GE Vernova's overall prospects are positive, driven by the increasing demand for electricity, particularly in the electrification segment. However, a thorough evaluation of the company's financials and future plans is crucial before investing.