On Wednesday, Jefferies updated its outlook on GE Vernova (NYSE: GEV) shares, increasing the price target to $391.00 from the previous $348.00, while maintaining a Buy rating on the company's stock. The company, now valued at $92.4 billion, has shown remarkable momentum with a 149% gain year-to-date, according to InvestingPro data.
The firm highlighted a successful Analyst Day where GE Vernova's management team announced an increase in projected 2028 margins to 14% from around 10%. The discussion included a potential rise to 16% in the power and electrification sectors.
The analyst noted several positive developments that support the company's long-term growth prospects. These include leading-edge indicators such as slot reservations and growing interest from data centers in natural gas generation.
Moreover, the tripling of the electrification backlog is expected to provide long-term visibility and further strengthen the company's market position. InvestingPro analysis shows the company maintains a strong balance sheet with more cash than debt, though it currently trades at a premium with a P/E ratio of 61x and an EV/EBITDA of 60.6x.
GE Vernova has also announced a significant $6 billion share repurchase plan, which is complemented by $8 billion in cash on hand and an anticipated free cash flow (FCF) of over $14 billion for the period from 2025 to 2028. The firm's capital allocation strategy is said to meet lofty expectations, with a forecasted 6% free cash flow yield for the fiscal year 2028 still being considered reasonable by the analyst.
The company's financial strategy and market activities have positioned it favorably in the eyes of Jefferies, as reflected in the updated price target and sustained Buy rating. This outlook is based on the firm's analysis of GE Vernova's recent announcements and financial plans.
With analyst targets ranging from $212 to $420 and a strong consensus recommendation of 1.82 (Buy), investors seeking deeper insights can access the comprehensive Pro Research Report and 13 additional ProTips available on InvestingPro.
In other recent news, GE Vernova has demonstrated significant growth potential with a revised 2028 adjusted EBITDA margin target of 14%, up from the previous 10%. This move follows a recent investor update where the company also announced plans to generate approximately $14 billion in cumulative free cash flow from 2025 to 2028.
Evercore ISI and Truist Securities have responded positively to these developments, both raising their price targets for GE Vernova to $390 and $400 respectively.
TD (TSX:TD) Cowen also initiated coverage on the company with a Buy rating, citing GE Vernova's successful turnaround and potential benefit from increased investment in the electricity supply sector. Guggenheim maintained a Buy rating and increased the price target to $400, citing underestimated free cash flow generation.
Recent developments also include GE Vernova's plans to invest around $4 billion in capital expenditures and $5 billion in research and development through 2028. The company has also outlined a commitment to shareholder returns, announcing a $0.25 per share quarterly dividend starting in the first quarter of 2025 and a $6 billion share buyback authorization.
Despite mixed third-quarter results, with revenue surpassing expectations but earnings falling short, GE Vernova reaffirmed its full-year 2024 guidance, projecting revenue to trend towards the higher end of $34-35 billion. The company has also announced a projected revenue target of $45 billion by 2028, reflecting confidence in its growth trajectory.
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