Evercore ISI has increased its price target for Vertiv Holdings Co. (NYSE: NYSE:) to $135.00 from $125.00, while keeping an Outperform rating on the stock.
The firm highlighted Vertiv’s robust performance in the September quarter, noting revenues and earnings per share (EPS) that exceeded market expectations.
Vertiv reported revenue of $2,074 million and EPS of $0.76, surpassing the consensus estimates of $1,979 million and $0.69, respectively.
The company experienced a 19% organic increase in overall sales, spurred by significant growth in various regions: EMEA saw a 26% rise, the Americas went up by 21%, and APAC had a more modest 10% growth. Vertiv also saw their order growth reach 17%, which is higher than the anticipated 10-15%. Additionally, the company’s backlog improved by $400 million quarter-over-quarter, reaching a record high of $7.4 billion, marking a 48% year-over-year increase.
Vertiv has signaled expectations for revenue acceleration in Calendar Year 2025, predicting growth above the 14% seen in Calendar Year 2024. The company also anticipates operating margins will continue to expand, with projections of mid to high teens revenue growth in Calendar Year 2025 and EPS exceeding $3.50. Further details are expected to be shared during the analyst day on November 18, 2024.
The company’s impressive EBIT margin performance stood at 20.1%, which is above their long-term target of 20%+ and suggests higher profitability in the fourth quarter, approximately 20.4%. Evercore ISI pointed out that despite potential volatility in order growth, Vertiv is structurally 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.
In other recent news, Vertiv, in collaboration with NVIDIA (NASDAQ:), launched a new 7MW reference architecture aimed at supporting AI applications in data centers. This development is part of Vertiv’s 360AI portfolio, which provides integrated power and cooling solutions for AI and high-performance computing applications. In financial updates, Vertiv reported a 14% increase in Q2 organic sales, primarily 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 highlighted by Evercore ISI is further supported by real-time data from InvestingPro. The company’s revenue growth of 12.66% in the last twelve months as of Q2 2024 aligns with the robust sales increase mentioned in the article. Moreover, the EBITDA growth of 53.21% over the same period underscores the company’s improving profitability, which is consistent with the impressive EBIT margin performance noted by Evercore ISI.
InvestingPro Tips suggest that Vertiv’s net income is expected to grow this year, which corroborates the company’s positive outlook for Calendar Year 2025. Additionally, the tip indicating that Vertiv is trading at a low P/E ratio relative to near-term earnings growth (with a PEG ratio of 0.51) supports the potential for future stock appreciation, aligning with Evercore’s increased price target.
It’s worth noting that InvestingPro offers 17 additional tips for Vertiv, providing investors with a comprehensive analysis of the company’s financial health and market position. These insights can be particularly valuable given Vertiv’s strong market performance, with a remarkable 202.05% price total return over the past year.
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