Investing.com -- BofA Securities upgraded Finnish power generation equipment maker Wärtsilä OYJ to “buy” from “underperform” on Friday, citing a €4.5 billion enterprise value opportunity in data center power generation.
The new price objective of €32, up from €15.50, represents upside from the current price of €29.51.
BofA raised EBITA estimates by 18% for 2026 and 24% for 2027, projecting the Finnish manufacturer could generate €1.5 billion in data center revenue during 2027 and €1.7 billion in 2028 at 15% EBITA margins.
Power generation has become a critical bottleneck for data center development, with availability increasingly determining deployment timelines.
Wärtsilä stands among few manufacturers capable of delivering equipment within one to two years, compared to three to five year lead times for gas turbines, positioning the Finnish company favorably as the industry shifts toward off-grid solutions.
The U.S. data center pipeline exceeded 245 gigawatts by mid-October 2025, with monthly additions growing at 435 megawatts over the past two years, according to Wood Mackenzie data cited in the report.
The top 15 developers have committed to more than 147 gigawatts of pipelines for deployment within five years.
Gas turbine costs reached $2,115 per kilowatt for combined cycle and $1,557 per kilowatt for open cycle turbines in 2025, nearly doubling since early 2024, based on Bloomberg New Energy Finance analysis of public utility commission filings. Lead times stretched from four years in early 2025 to six years for combined cycle turbines.
Gas engines cost $110-120 per megawatt hour versus $80-90 for turbines, reflecting lower efficiencies of 45-50% compared to 65%, according to the report. However, shorter lead times provide significant advantages as turbine supply tightens.
Federal regulators proposed rules favoring data centers with collocated power generation, with US Secretary of Energy Chris Wright initiating rulemaking on October 23 to accelerate connection of loads exceeding 20 megawatts.
Approximately 61 gigawatts of planned capacity involves onsite natural gas generation, based on Wood Mackenzie data showing 40 deployments.
BofA estimates Wärtsilä’s total capacity at 3.5 gigawatts, noting Caterpillar’s announced 40 gigawatt engine capacity expansion over five years presents direct competition.
The Finnish manufacturer and Man Energy currently dominate the 10-50 megawatt baseload engine segment suitable for data center prime power.
BofA projects group orders of €8.63 billion for 2026 and €9.33 billion for 2027, increases of 12.3% and 18.1% from prior estimates. Energy division orders should reach €3.45 billion in 2026 and €3.97 billion in 2027, representing 23% and 37% increases.
The brokerage expects adjusted EBIT of €957 million in 2026 and €1.11 billion in 2027. Using sum-of-the-parts valuation, BofA applies 15 times enterprise value to EBITA for traditional businesses and 20 times for the data center segment, a 10% discount to its Siemens Energy valuation.
Marine contracting declined 37% year-over-year through October 2025 on a three-month rolling basis, according to Clarkson data, with BofA expecting marine orders to reach €3.8 billion in 2026.
