GE Vernova Inc. (NYSE:GEV) shares are trading lower on Thursday. Truist Securities analyst Jordan Levy initiated coverage on the company with a Buy Rating and a price target of $300.
The analyst writes that GEV is uniquely positioned to capitalize on the multiple secular tailwinds driving the energy transition.
Notably, the analyst anticipates further upside as GEV accelerates growth and margin expansion, driven by significant shifts in U.S. power demand.
Levy writes that GEV is in the early stages of a growth inflection that will significantly enhance shareholder value through future buybacks and dividends, as well as an exceptional M&A opportunity set. The analyst estimates free cash flow approaching $2.5 billion by 2026.
GEV is capitalizing on its strong position in the electrification segment by shifting focus to higher-margin, supply-constrained markets in the U.S, adds the analyst.
Levy anticipates an EBITDA of $4.6 billion for 2026, about 6% above current estimates, with both the power and electrification segments likely to achieve mid-teens EBITDA margins by the end of 2026.
The analyst projects a doubling of topline revenue and a 400 basis point increase in EBITDA margins for the electrification segment over the next two years, with long-term margins potentially nearing 20%.
GEV is set to expand capacity for its heavy-duty turbines in response to strong demand signals, adds the analyst.
The analyst projects power 2026 revenues and EBITDA to reach $20 billion and $3 billion, respectively, surpassing Street estimates of $19.6 billion and $2.7 billion.
In another development, GE Vernova disclosed today that it has been chosen by the U.S. Department of Energy's Hydrogen and Fuel Cell Technologies Office (HFTO) to lead award negotiations for a project aimed at improving permitting and safety for hydrogen deployment.
Investors can gain exposure to the stock via Invesco S&P Spin-Off ETF (NYSE:CSD) and Fidelity Clean Energy ETF (BATS:FRNW).
Price Action: GEV shares are down 1.38% at $251.54 at the last check Thursday.
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