GE Burnova is gaining momentum a month after launching as an independent company, and analysts say the General Electric spinoff has assets well positioned to benefit from the energy transition. GE Burnova shares have risen about 16% to $177.32 since it listed on the New York Stock Exchange on April 2 after General Electric was split into three separate companies. Investors have shown growing interest in Burnova’s assets across natural gas, wind and power grid infrastructure. GEV 1M GE Burnova, 1 month “We believe GE Burnova is well positioned to benefit from the ‘three building blocks of the energy transition’ through its strong portfolio of equipment and service offerings,” Morgan Stanley analysts Andrew Percoco and Asmita Bhaskar told clients in a research note this month. The three building blocks are growing demand for electricity, grid reliability and the need to reduce carbon emissions.According to an April report from Goldman Sachs, electricity demand from data centers and artificial intelligence is expected to double to 8% of total U.S. consumption by 2030. There is a growing consensus among analysts that natural gas will play a key role in supplying the increased electricity demand. Maheep Mandroy, director of clean energy research at Mizuho Securities, said gas is the “mainstay” of GE Burnova’s business. GE Burnova has more than 7,000 gas turbines installed around the world, and 70% of its gas-powered business is focused on servicing those turbines, CEO Scott Strajk told investors in March. Increased utilization of gas assets due to increased electricity demand will benefit GE Burnova’s service business, Mandroy said. “The service business is interesting because as grid utilization increases, so will bids for services,” Mandroy said. “You’re going to see more wear and tear and you’re going to see faster replacements,” he said. GE Barnova’s power business revenue rose 6% year over year to $4 billion in the first quarter of 2024, driven by gas services due to increased outages and higher prices. The company’s gas turbine orders surged 25% to $5 billion. GE Barnova has a strong grid electrification business that sells transformers, switchgear and other equipment, Mandroy said. The company is also one of the top five wind turbine manufacturers in the world. “These three businesses have generally benefited from increased load,” the analyst said. Mizuho has a buy recommendation on GE Barnova, with strengths in gas equipment services, disciplined growth in wind and potential margin expansion in electrification. Morgan Stanley has an equal weighting on the stock, arguing that the company’s valuation appropriately balances downside risks and momentum in offshore wind. “We recommend investors remain nimble and take advantage of any near-term dips in the stock price,” Percoco and Bhaskar told clients. GE Vernova reaffirmed its guidance for 2024 sales of $34 billion to $35 billion. Power is expected to post mid-single-digit sales growth. Wind sales are expected to be flat but profitable, and Electrification is expected to post low double-digit sales growth.
GE Vernova Gains Momentum with Three Key Energy Transition Themes
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