GLJ gave GE Vernova (GEV.US) a “sell” rating: the target price of $470 is the lowest on Wall Street, and bluntly stated that “cyclical industrial stocks are priced as software stocks”

The Zhitong Finance App learned that GE Vernova (GEV.US) closed down 8.6% on Monday after GLJ Research gave the stock a “sell” rating and gave Wall Street's lowest target price of 470 US dollars, saying that the company is “a cyclical gas turbine manufacturer priced according to long-term compound interest growth stocks,” and the stock is currently trading at close to $880.

On Monday, the overall power infrastructure sector of US stocks weakened, while GE Vernova led the decline, continuing the previous downward trend. Even after experiencing Monday's sharp decline, the stock was still up one-third during the year, but it had a cumulative decline of 16% over the past month.

GLJ's Gordon Johnson said that GE Vernova “is a cyclical industrial enterprise, but the valuation is against a software company.” He pointed out that the stock's forward EV/EBITDA ratio is 38.9 times, almost four times the valuation of Micron Technology (MU.US), and that Micron's profit also depends on its uncontrollable industry supply and demand pattern.

Johnson wrote, “In the lifetime of most people covering this stock, gas turbines have gone through two full boom-bust cycles. But the market decided that this time was different. We think the market came to this conclusion too early.”

The analyst said that GE Vernova's order-to-delivery cycle has been extended to 4 to 5 years, high premium orders will not be fulfilled until 2029, and cycle risks will be concentrated in 2030. He asserted that all orders placed in 2026 and 2027 will be delivered from 2030 to 2031, when its supply model shows that the industry's effective production capacity is 104 to 113 gigawatts, while the order volume is only 88 to 90 gigawatts.