Evercore ISI has raised its price target for Vertiv Holdings Co. (NYSE: VRT) to $135.00 from $125.00, maintaining an Outperform rating on the stock.
The firm noted Vertiv’s strong performance in the September quarter, with revenues and earnings per share (EPS) surpassing market expectations.
Vertiv reported revenue of $2,074 million and EPS of $0.76, beating consensus estimates of $1,979 million and $0.69, respectively.
The company saw a 19% organic sales increase overall, driven by significant growth in different regions: EMEA grew by 26%, the Americas by 21%, and APAC by 10%. Vertiv also experienced a 17% increase in orders, exceeding the expected 10-15%. Moreover, the company’s backlog increased by $400 million quarter-over-quarter, reaching a record $7.4 billion, marking a 48% year-over-year growth.
Vertiv anticipates revenue acceleration in Calendar Year 2025, with growth expected to exceed the 14% seen in Calendar Year 2024. The company also projects expanding operating margins, with mid to high teens revenue growth in Calendar Year 2025 and EPS surpassing $3.50. More details will be shared during the analyst day on November 18, 2024.
The company’s impressive EBIT margin performance of 20.1% surpasses the long-term target of 20%+, indicating higher profitability in the fourth quarter at around 20.4%. Despite potential order growth volatility, Vertiv is positioned for over 20% sales growth in Calendar Years 2025 and 2026. The TTM basis order growth is trending in the mid-30% range, providing a strong foundation for sales acceleration in Calendar Year 2025 and beyond.
Recently, Vertiv, in partnership with NVIDIA (NASDAQ: NVDA), launched a new 7MW reference architecture to support AI applications in data centers. This initiative is part of Vertiv’s 360AI portfolio, offering integrated power and cooling solutions for AI and high-performance computing applications. Financially, Vertiv reported a 14% increase in Q2 organic sales, driven by growth in the Americas and EMEA regions, resulting in an adjusted operating profit of $382 million.
InvestingPro Insights
Vertiv Holdings Co.’s (NYSE: VRT) strong performance, as highlighted by Evercore ISI, is further supported by real-time data from InvestingPro. The company’s 12.66% revenue growth in the last twelve months as of Q2 2024 aligns with the significant sales increase mentioned. Additionally, the 53.21% EBITDA growth over the same period reflects the company’s improving profitability, consistent with Evercore ISI’s noted impressive EBIT margin performance.
InvestingPro Tips indicate that Vertiv’s net income is expected to increase this year, supporting the company’s positive outlook for Calendar Year 2025. The tip also suggests that Vertiv is trading at a low P/E ratio relative to near-term earnings growth, with a PEG ratio of 0.51, indicating the potential for future stock appreciation in line with Evercore’s raised price target.
InvestingPro offers 17 additional tips for Vertiv, providing investors with a comprehensive analysis of the company’s financial health and market position. These insights are valuable given Vertiv’s strong market performance, with an impressive 202.05% price total return over the past year.
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