GLJ initiates GE Vernova (GEV.US) with a "Sell" rating: $470 price target is the lowest on Wall Street, stating bluntly that "a cyclical industrial stock is being priced like a software stock"

GE Vernova (GEV.US) closed down 8.6% on Monday after GLJ Research initiated coverage with a "Sell" rating and issued the lowest price target on Wall Street at $470, calling the company "a cyclical gas turbine manufacturer being priced like a long-term compounder," while the stock currently trades near $880. On Monday, the U.S. power infrastructure sector weakened broadly, with GE Vernova leading the sector's decline, extending its previous downtrend. Even after Monday's sharp drop, the stock is still up by one-third year-to-date, but has fallen 16% over the past month. GLJ's Gordon Johnson said GE Vernova "is a cyclical industrial company valued like a software company." He noted that the stock trades at a forward EV/EBITDA multiple of 38.9x, nearly four times the valuation of Micron Technology, Inc. (MU.US), whose earnings also depend on industry supply-demand dynamics beyond its control. Johnson wrote: "Gas turbines have been through two full boom-bust cycles in the lifetime of most people covering this stock. The market has decided this time is different. We believe the market has reached this conclusion too early." The analyst said GE Vernova's order-to-delivery cycle has lengthened to 4 to 5 years, with high-premium orders not materializing until 2029, and cyclical risks concentrated in 2030. He asserted that all orders placed in 2026 and 2027 will be delivered in 2030 to 2031, at which point its supply model shows industry effective capacity of 104 to 113 gigawatts, while order volumes are only 88 to 90 gigawatts.