GE Vernova (GEV) is likely to deliver a bullish Q1 earnings report, driven by strong equipment orders and limited tariff exposure, despite some concerns about short-term margins, RBC Capital Markets said in a report Monday.

"Recent investor conversations highlight some concerns around the long-term demand potential for gas turbines," RBC said, adding that it expects the company to address these concerns with positive demand narratives and strong bookings, potentially leading to share outperformance.

GE Vernova's power segment is expected to drive growth, with analysts predicting over 5.5 gigawatts in gas turbine orders exceeding $2.5 billion. Despite concerns over turbine demand due to project cancellations and delays, RBC view high equipment prices and long lead times as signs of the company's pricing power, the report said.

Revenue forecasts for the power segment are around $4 billion, in line with consensus, but earnings before interest, taxes, depreciation, and amortization is projected at $417 million, slightly below the consensus of $425 million.

GE Vernova's wind segment is expected to see margin pressure from a $100 million investment in fleet performance improvements in early 2025, with revenue projected to rise 5% year-over-year to $1.7 billion and losses remaining steady at $168 million, RBC said.

Tariff concerns due to tight supply chains, particularly for turbine blades, are expected to have limited impact as the company and its suppliers are likely to pass on costs, though some near-term margin pressure is anticipated, the report said.

RBC has an outperform rating on GE Vernova with a price target of $445.

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