This Power Stock Is Up 5x Since April 2024. There’s More Room to Run, Analyst Says.

AI data centers have turbocharged electricity demand growth in the U.S. That’s helping companies such as GE Vernova. (Joe Raedle/Getty Images)

Key Points

About This Summary

• Melius Research analyst Rob Wertheimer upgraded GE Vernova to Buy with a price target of $740, citing potential for upside surprises.
• U.S. electricity demand is projected to grow 2.5% annually from 2024-2035, boosting demand for GE Vernova’s power generation equipment.
• Wertheimer also upgraded Eaton to Buy, noting dissipating concerns around valuation due to AI capex and a less demanding valuation.

GE Vernova stock has been on a tear, boosted by growing demand for electricity coming from power-hungry AI data centers. There’s more room for the stock to run, according to one Wall Street analyst.

Melius Research analyst Rob Wertheimer upgraded GE Vernova stock to Buy from Hold on Monday. His price target went to $740 a share from a recent $521.

“The stock is up 5x from the spin, and there’s a lot of room for surprise to the upside on sell-side estimates…moving towards 2027 and beyond,” says Wertheimer.

GE Vernova separated from GE Aerospace in April 2024. On Monday, GE Vernova stock rose 0.5% to $628.68. The S&P 500 and Dow Jones Industrial Average added 0.5% and 0.1%, respectively.

After growing at 0.5% between 2014 and 2024, U.S. electricity demand should grow at 2.5% a year on average between 2024 and 2035, estimates BofA Securities. That will drive demand for more power generation equipment, the kind that GE Vernova provides.

Currently, Wall Street expects GE Vernova to generate 2027 earnings per share of $18.18, up from about $7.55 in 2025. At the time of the spinoff, the 2027 earnings estimate was closer to $9.50 a share.

That growth will benefit more than just GE Vernova. Wertheimer also upgraded shares of electrical infrastructure provider Eaton to Buy from Hold. His price target went to $495 from $412.

Eaton stock rose 2.6% to $375.54 on Monday.

“Concerns around valuation and slowing earnings momentum have dissipated given reaccelerating AI capex news flow and a less demanding valuation,” added Wertheimer.

Eaton trades for about 27 times estimated 2026 earnings, down from about 30 times at the start of the year.

Overall, about 71% of analysts covering GE Vernova stock rate shares Buy, according to FactSet. The average Buy-rating ratio for stocks in the S&P 500 is about 55%. The average analyst price target is about $679.

Two-thirds, or 67%, of analysts rate Eaton shares Buy. The average analyst price target is about $398.

Coming into Monday trading, Eaton stock was up about 10% this year, and GE Vernova stock was up about 90%.

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