Al Root
Investors are looking for stock winners and losers as President-elect Donald Trump's cabinet takes shape.
Saturday, Trump nominated Chris Wright for Energy Secretary. Wright is the CEO of fracking-services company Liberty Energy as well as an MIT alum.
The pick is a "strong signal for natural gas," wrote William Blair analyst Jed Dorsheimer in a Monday report, adding Wright believes that renewables will only meet part of electricity demand with nuclear and fossil fuels playing a role.
" GE Vernova is best positioned to benefit as the energy sector under Wright reverts to natural gas and pragmatism to boost domestic energy production," wrote Dorsheimer.
GE Vernova makes wind turbines and power grid technologies. Its most profitable division makes natural gas-fired power generation turbines. The company is increasing turbine production to about 80 a year from 55.
Dorsheimer rates GE Vernova stock the equivalent of Buy, and doesn't have a price target. A Buy rating for him essentially means he expects shares to outperform the market in the coming year.
His peers largely agree. Almost 75% of analysts covering the 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 for GE Vernova shares is about $317, up about $10 since the Nov. 5 presidential election.
Coming into Monday trading, Vernova stock was up about 4% since the election and up about 136% since it started life as an independent company after being spun out of GE Aerospace on Apr. 2.
Gains leave GE Vernova stock trading at about 20 times Dorsheimer's 2026 earnings before interest, taxes, depreciation, and amortization, or Ebitda, estimates. He calls that a "premium" but believes "further upside remains."
Faster demand growth for its gas turbines would be one source of additional upside.
GE Vernova stock was down 0.4% in early trading Monday while the S&P 500 was up about 0.1% and the Dow Jones Industrial Average was down about 0.1%.
Write to Al Root at allen.root@dowjones.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
November 18, 2024 10:12 ET (15:12 GMT)
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