GE Vernova Inc. (NYSE:GEV) shares are trading higher after BofA Securities analyst Andrew Obin upgraded the stock from Neutral to Buy and raised its price target from $200 to $300.
The analyst writes that while rising grid-related spending benefits the Electrification segment, they believe the potential of Gas Power Services (29% of revenue) is underappreciated by investors.
Notably, the analyst writes that electricity generation for U.S. combined cycle plants has grown at a 5.1% CAGR from 2014 to 2024, while simple cycle gas turbines have grown at an 11.6% CAGR.
Hence, an increase in utilization is already boosting growth in GEV's transactional services, which are rising at an approximately 8% CAGR from 2020 to 2023.
Also Read: Power And Electrification Propel GE Vernova's Q2 Performance, Wind Orders Lag, Guidance Raised
Obin expects GEV to outperform and exceed expectations in the coming quarters consistently. Consequently, the analyst raised the 2025/2026 estimates due to anticipated faster earnings growth in Gas Power Services.
Obin raised the 2025 adjusted EBITDA estimate by $0.5 billion to $3.6 billion and the 2026 estimate by $1.1 billion to $5.4 billion. These estimates are 16% and 27% higher than the current consensus, respectively.
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 up 3.78% at $238.63 at the last check Tuesday.
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