Vertex is the IBD Stock Of The Day as the maker of corporate tax compliance software shows its resilience in an unstable market. VERX stock flirted with a buy point on Wednesday.
In morning trades on the stock market today, VERX stock hit a buy point of 22.98 out of an eight-week consolidation period, according to IBD MarketSmith charts. It notched a two-year-plus high of 23.77 before pulling back.
Aggressive investors could have used the stock's move above a short trendline for an entry. The stock's May 26 high of 22.36 provided that alternative buy point, based on IBD analysis.
VERX stock ended the trading day up 2.5% to 22.28.
Earnings Report Lifts VERX Stock
VERX stock has been trending higher since the company's first-quarter earnings report on May 10. The King of Prussia, Pa.-based firm met estimates for earnings on slightly better-than-expected sales.
Vertex earned an adjusted 8 cents a share on sales of $132.8 million in the March quarter. Earnings were unchanged from the year-earlier period while sales climbed 15%.
"Companies all around the world are struggling with the complexity of indirect taxes, and Vertex continues to differentiate itself as the provider of choice in the tax automation space, especially with large enterprises," Chief Executive David DeStefano said in a news release.
He also forecast improving earnings leverage through the rest of the year.
Vertex Ranks Second In Its Group
"Vertex's business is steady relative to many other enterprise software companies," Needham analyst Joshua Reilly said in a note to clients. Vertex offers a "mission-critical product at a low price point."
Reilly rates VERX stock as buy with a price target of 25.
Goldman Sachs analyst Adam Hotchkiss said Vertex is likely being conservative with its full-year outlook. He rates VERX stock as buy with a price target of 25.
"While we view the durability in Vertex's business as attractive in an uncertain macro, we continue to also be encouraged by the company's competitive positioning in Europe, incremental traction with partners like IBM, Salesforce, Workday and SAP, and elevated customer engagement on the back of outsized technological investments," Hotchkiss said in his note to clients.
Those factors should drive upside to the company's prospects this year and next, he said.
Vertex ranks second out of 41 stocks in IBD's Computer Software-Financial industry group, according to IBD Stock Checkup. VERX stock has an IBD Composite Rating of 97 out of 99.
VERX stock is on the IBD Tech Leaders list.
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