Overview
Rothschild Redburn has moved GE Vernova from a Sell rating to a Buy rating, and increased its price target to $1,100 from $560. The brokerage cites rising demand and improved margins across power equipment and services, driven in part by accelerated data center construction related to artificial intelligence, which is lifting the outlook for gas turbines.
Demand and margins
According to the brokerage, indicators tied to AI-powered power requirements and gas turbine orders have risen sharply. Order-level margins for new gas turbines and associated services are improving, supporting a more optimistic earnings trajectory for the company.
Forecast revisions
Rothschild Redburn now expects GE Vernova’s 2028 EBITDA to be roughly 47% above current consensus estimates and about 52% higher than the company’s own floor guidance. The upgrade in the earnings outlook is attributed mainly to better profitability in the power segment, with analysts forecasting an EBITDA margin above 30% in 2028 compared with the company’s floor guidance of 22%.
The brokerage also raised its estimate of the global gas turbine market size, now seeing demand exceeding 100 gigawatts in both 2026 and 2027 versus its earlier view in the low-80 gigawatt range.
Valuation implications
Despite stronger earnings, analysts note that the improved outlook reduces the company’s longer-term valuation multiple. Under the new forecasts, GE Vernova’s 2028 price-to-earnings ratio would be about 18 times, according to the brokerage.
Risks and caveats
Rothschild Redburn warns that current share prices are hard to reconcile on a discounted cash flow basis unless high margins are sustained over the long term. The firm highlights several scenarios that could erode the recent margin strength: a slowdown in AI adoption, or constraints on data center growth stemming from permitting delays, labor shortages, or infrastructure bottlenecks. Those risks could diminish gas turbine demand and related service margins.
At the same time, the brokerage observes that the possibility of further upward revisions to company guidance and consensus estimates makes it more difficult to maintain a negative stance.
Other coverage
Rothschild Redburn kept a Neutral rating on Siemens Energy and lifted its price target for that company to 180 from 117.
This report outlines the brokerages revised financial expectations and the demand dynamics underlying them, while noting the uncertainties that could temper the improved outlook.