Not Even Two Downgrades Could Take Down GE Vernova Stock

Mizuho and Guggenheim both downgraded shares of power-generation firm GE Vernova. (Qilai Shen/Bloomberg)

Trees don’t grow to the sky, they say, and GE Vernova stock has risen too far for two Wall Street analysts. Still, two downgrades for shares of the power-generation technology company couldn’t keep the stock down on Monday.

GE Vernova stock was down most of the day, but eked out a 0.5% gain, closing at $647.66. The S&P 500 finished flat and the Dow Jones Industrial Average dropped 0.1%.

Coming into Monday trading, GE Vernova stock was up a whopping 24% over the past month, up 96% year to date, and up 272% over the past 12 months.

“Gas and grid continue to impress, but downgrade to [Hold from Buy] on
valuation,” wrote Mizuho analyst Maheep Mandloi in a Monday report.

Gas is the company’s natural-gas power-generation turbine business. Orders in the second quarter, reported this past week, were up 42% year over year, and profit margins improved to 16.4% from 13.8% in the second quarter of 2024. Grid is the company’s electric-grid technology business. Sales grew 23% year over year in the second quarter, and profit margins improved to 14.6% from 7.2%.

Things are good right now, but “valuation looks stretched after [the] year-to-date move,” added Mandloi. His target price, however, jumped to $670 from $412.

His downgrade comes as Guggenheim analyst Joseph Osha cut his rating on GE Vernova stock to Hold from Buy on Monday. He removed his $600 price target.

“The stock’s valuation fully reflects even the substantially above-consensus estimates that we are publishing as part of today’s note,” wrote Osha. “Valuation is still admittedly attractive if investors are willing to focus on 2029 and beyond, but considering the wait required to get to that outcome, combined with the stock’s substantially higher
valuation….we no longer find GEV attractive from a risk/return standpoint.”

Osha projects 2027 earnings per share of $18.79, up from $18.01. The Wall Street consensus estimate stands at $17.74, according to FactSet.

At recent levels, GE Vernova stock was trading at about 34 times Osha’s estimated 2027 earnings. The S&P 500 trades at almost 23 times estimated earnings forecast for the next 12 months.

To be sure, GE Vernova is an expensive stock, partly because its future looks bright. Osha estimates that pricing for gas power turbines in 2030 will be 71% higher than in 2024. The outlook for GE Vernova’s electrification business is rock solid as well, with “strength extending through 2030.”

GE Vernova’s business is booming. Now, investors have to decide what to pay for the stock.

Overall, now 65% of analysts covering GE Vernova stock have Buy ratings, according to FactSet. The average Buy-rating ratio for stocks in the S&P 500 is about 55%. The average analyst price target for GE Vernova stock is about $637, up from about $484 at the start of July.

Write to Al Root at allen.root@dowjones.com