GE Vernova Stock Fell With Latest Call to Sell

Coming into Wednesday trading, GE Vernova stock was up 96% year to date and up 142% over the past 12 months. (SEBASTIEN BOZON/AFP via Getty Images)

Key Points

• GE Vernova stock received a downgrade to Sell from Rothschild, citing material overvaluation, despite rapid growth expectations.
• The stock trades at about 51 times next year’s expected earnings, up from 40 times a year ago, compared to 24 times for S&P 500 industrials.
• Despite the downgrade, 64% of analysts rate GE Vernova shares a Buy, with an average price target of approximately $687.

Sometimes even great stocks get too expensive for some analysts.

Shares of the highflying power-generation equipment company GE Vernova are the latest example. The stock caught a downgrade to Sell on Wednesday, sending the price lower in early trading.

Analysts at Rothschild cut their rating to Sell from Hold and kept a $475 price target for the shares, calling them “materially overvalued,” according to stock-rating aggregators. Barron’s hasn’t seen a copy of the report yet.

At current levels, GE Vernova stock trades for about 51 times the earnings expected for next year, according to FactSet, up from about 40 times a year ago. Industrial companies in the S&P 500 trade for closer to 24 times.

GE Vernova, however, is expected to grow rapidly as demand for electricity expands, thanks in part to the artificial intelligence data-center buildout. Wall Street projects 2028 earnings per share of more than $24, up from about $7.60 expected in 2025.

GE Vernova stock was lower early, but clawed back to trade as high as $664.69. Gains didn’t last, and shares closed at $615.14, down 4.4%. The S&P 500 added 0.4% and the Dow Jones Industrial Average finished just into the red.

Helping offset the new Sell rating in early trading were price-target hikes from Mizuho and GLJ Research.

Mizuho analyst Maheep Mandloi raised his price target to $677 from $670 but kept a Hold rating on the shares. He sees the potential for management to raise its financial forecasts when GE Vernova reports third-quarter earnings next week. Currently, the company is forecasting 2025 earnings before interest, taxes, depreciation, and amortization will be in a range of roughly $3 billion to $3.3 billion.

GLJ Research analyst Austin Wang increased his price target to $758 from $702 and kept his Buy rating on the stock. He doesn’t think investors fully appreciate how strong pricing is for GE Vernova’s power-generation products.

Overall, 64% of analysts covering the company rate shares Buy, according to FactSet. The average Buy-rating ratio for stocks in the S&P 500 is about 55%.

A year ago, the average Buy-rating ratio for Vernova stock was about 73%. There have been a few downgrades as shares have risen. Coming into Wednesday trading, GE Vernova stock was up 96% year to date and up 142% over the past 12 months.

A downgrade to Sell doesn’t change the average Buy-rating ratio. Three analysts, or less than 10%, now rate shares Sell. A year ago, GE Vernova stock had one Sell rating.

The average analyst price target for GE Vernova stock is about $687 a share. A year ago, the target price was closer to $307.

Few saw just how good things would get for the maker of power generation equipment.

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