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This AI Power IPO May Already Be Pricing In the Good News — Barrons.com
This AI Power IPO May Already Be Pricing In the Good News — Barrons.com
About this update from Innio N.v.
By Paul R. La MonicaThe AI power story may be going strong, but for at least one initial public offering, Innio, Wall Street doesn't see much juice left in the tank.Munich, Germany-based Innio went public on June 4 at a price of $27. It's now trading around at just under $39, more than 40% above its IPO price. The company also has U.S. headquarters in Waukesha, Wisconsin.The big brokerages don't see prices moving much higher over the next year. At least 10 analysts initiated coverage on Monday, resulting in an average target of $44.60, about 15% above current levels. Innio was up around 3% in trading late Monday after falling earlier in the session, a sign that Wall Street wasn't more bullish.There were also some lukewarm recommendations. Citigroup issued a Neutral rating on the stock. Deutsche Bank began coverage of Innio with a Hold, and RBC assigned a Sector Perform, another somewhat unenthusiastic rating, on the stock.Why such a tepid reaction?It's not Innio's core business: the company sells gas engines and its data center business is thriving. Although Innio lost money ($7.2 million) in the first quarter of this year, the company was profitable in both 2024 and 2025. Net income rose 57% in 2025 to $144.3 million, while revenue increased 22%.The problem is much more about valuation. The stock, like many AI names, is now trading at a premium price. And the company may have to work a lot harder — signing more data center deals — for the stock to grow into its already steep valuation.Bank of America's Andrew Obin has a Buy rating on the stock and a $46 price target. But Innio is trading at 116 times his earnings estimates for this year and 50 times his 2027 forecasts.Obin is still bullish, launching coverage with a Buy and $46 price target in a report titled "The Little Engine that Could." Obin noted that while only 21% of Innio's equipment revenue for the past 12 months came from data centers, 61% of trailing orders were from data centers. That should mean big revenue ahead."Developers are turning to on-site power generation in response to long grid connection wait times," Obin wrote.But Obin is also concerned about how rapidly data centers have been building out. There could be an inevitable slowdown ahead. "Doubling equipment capacity in three years comes with risks of construction delays and ramping labor," Obin wrote, adding that there are growing ...