Goldman Sachs analyst Joe Ritchie initiated coverage on GE Vernova Inc (NYSE:GEV) shares with a Buy rating and a price target of $154.

GEV's installed base of turbines (gas, steam, nuclear, hydro, wind, etc.) and aeroderivatives currently provide ~30% of the world's electricity, said the analyst.

While GEV's Electrification assets have historically been Europe centric, the analyst noted GEV's advanced grid technologies will play a crucial role in modernizing, integrating and automating the grid going forward. 

After bottoming in 2018, the Power business has been in turnaround mode, and the analyst is encouraged by the progress, particularly in Gas Power, which turned profitable ahead of schedule in 2022.

In 2024, the analyst expects the entire Power business to achieve double-digit profitability.

Despite all the progress made in the last few years, the analyst noted there is still meaningful under-earning potential across the Wind and Electrification portfolio.

The analyst said consensus is under-estimating not just 2025 Onshore Wind organic growth but also profitability as Onshore Wind should exit 2024 with at least low-teens margins. 

Also, given most of the backlog is in Europe today, there is a multi-year tailwind from U.S. grid investment that is under-appreciated, noted the analyst.

The analyst sees GEV's sales and EBITDA growth outpacing its peers in the coming years, and the company should also generate strong FCF growth.

Also, the analyst is positive about the progress the management team has made over the last 2+ years to make GEV structurally more profitable.

Price Action: GEV shares are trading lower by 1.36% at $129.96 on the last check Tuesday.