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

According to reports from Zhihu Finance APP, GE Vernova (GEV.US) closed down 8.6% on Monday, after GLJ Research assigned the stock a "sell" rating and gave it the lowest price target on Wall Street at $470, stating that the company is "a cyclical gas turbine manufacturer priced as if it is a long-term compound growth stock," while the stock is currently trading near $880.

On Monday, the US electric power infrastructure sector as a whole weakened, with GE Vernova leading the sector downturn and continuing its previous declining trend. Even after Monday's sharp decline, the stock is still up by one third for the year, but it has fallen 16% in the past month.

Gordon Johnson of GLJ stated that GE Vernova "is a cyclical industrial company valued like a software company." He pointed out that the stock's forward EV/EBITDA ratio is 38.9, nearly four times that of Micron Technology (MU.US), whose profitability also depends on industry supply and demand dynamics beyond its control.

Johnson wrote, "In the living memory of most people covering this stock, gas turbines have already gone through two full boom–bust cycles. Yet the market insists this time is different. We believe the market is coming to this conclusion too early."

The analyst stated that GE Vernova's order-to-delivery cycle has extended to four to five years, with high-premium orders not materializing until 2029 and cyclical risk concentrating in 2030. He asserted that all orders placed in 2026 and 2027 will be delivered between 2030 and 2031, when his supply model indicates that the industry's effective capacity will be 104 to 113 gigawatts, while order volume will be only 88 to 90 gigawatts.