From Bloomberg, December 10:
GE Vernova Inc. surged after showering shareholders with rewards in the latest sign that demand for new natural gas-fired power will remain robust for years into the future.
Shares of the supplier of electric-generation equipment climbed 10% before the start of regular trading Wednesday, a day after it doubled its dividend, increased the scope for share buybacks and raised earnings projections at an investor day in New York.
GE Vernova has benefited from soaring US demand for electricity, driven by data centers, artificial intelligence and overall electrification of the economy. Shares of the company, which which spun off from General Electric Co. in early 2024, have risen about 90% this year.
“AI is a real driver for us right now, but it isn’t the only driver,” Chief Executive Officer Scott Strazik said in an interview Tuesday. “We’re going to generate a lot of cash and that’s going to give us a chance to play offense.”
The Cambridge, Massachusetts-based company estimated future earnings beyond 2028 to $52 billion from $45 billion and raised its adjusted earnings before interest, taxes, depreciation and amortization margin for the same period to 20% from 14%.
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The company’s bullish outlook prompted Oppenheimer & Co. to upgrade its recommendation to the equivalent of buy.
The company’s “expertise in high and medium voltage technologies as well as integrated solutions bodes well for market share gains,” Oppenheimer analysts led by Colin Rusch wrote in a research note Wednesday. That proficiency offers GE Vernova the potential to become the “primary technology partner for multiple hyperscalers,” the analysts said.
GE Vernova, one of this year’s best performers in the S&P 500, also raised its per-share quarterly dividend to 50 cents and increased share repurchase authorization to $10 billion from $6 billion. The company expects to grow its total backlog from $135 billion to about $200 billion by the end of 2028, which will include a doubling of its electrification segment backlog to $60 billion from $30 billion.
The company forecast stronger-than-expected profit margins in its power and electrification businesses but slightly weaker performance from its wind segment. The former are expected to generate adjusted earnings before interest, taxes, depreciation and amortization margins of 22% each by 2028, while the latter is seen yielding 6%....
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In late pre-market action the stock is up $63.35 (+10.13%) at $688.66.
