Data center and communications network technology leader Vertiv Holdings is the IBD Stock Of The Day for Monday. VRT stock is a member of the Leaderboard Leaders list and has so far rallied 188% in 2023.
Vertiv provides IT components and maintenance services for data centers, cloud networks and commercial and industrial customers. The company manufactures power and thermal management devices, as well as hardware and software for data center equipment. It also offers a range of preventive maintenance, testing, training and monitoring services.
Columbus, Ohio-based Vertiv employs roughly 27,000 people and operates in more than 130 countries, according to company filings. It was initially the Network Power unit of St. Louis, Mo.-based Emerson Electric. Private equity firm Platinum Equity acquired the unit in 2016 for $4 billion, then changed the name to Vertiv.
Vertiv's earnings growth spiked by triple digits the past three quarters. Meanwhile, revenue averaged 23.5% growth the past four quarters. Veritiv blew by estimates for its most recent Q2 results in early August. Earnings increased to 46 cents per share from 10 cents per share the year prior. Sales jumped 24% to a quarterly record $1.73 billion. FactSet analysts expected earnings of 29 cents per share on $1.62 billion in revenue.
Analyst Views
Citi raised its price target on Vertiv stock to $47 from $40 early Monday and maintained a buy rating on shares. Demand trends across most industrial end markets are "largely resilient," which should drive industrial conglomerates to meet expectations for Q3 results and support growth outlooks into 2024, the firm wrote in a research note. Citi expects some order moderation and channel destocking as supply chain conditions continue to ease, but those trends are largely anticipated.
Elsewhere, Deutsche Bank noted Vertiv stock "clearly caught the AI wave," in a Sept. 14 research note. The firm wrote there is potential for over 50% further upside if data center investments continue growing at a double-digit clip. Deutsche Bank boosted its price target on VRT stock to $48 from $39 and kept a buy rating on shares, but noted it sees a path to a $57-plus share price.
Meanwhile, Evercore ISI says Vertiv has the top market share for thermal management solutions and is a powerhouse in the arena, according to an Oct. 1 note. The company has an advantage over its competitors, which include Eaton and APC, due to its association with Liebert, which invented precision cooling, according to Evercore. Vertiv is also working to optimize energy consumption and offering contracts on energy savings to earn higher payouts, if a higher percentage of operating expenses is saved, the firm wrote. Evercore has a $50 price target and a buy rating on shares.
For fiscal 2023, analysts polled by FactSet expect Vertiv to report 203% earnings growth to $1.61 per share on nearly 20% revenue growth to a record $6.82 billion.
Vertiv Stock
Vertiv stock ran up 195% from the start of the year through August. It then pulled back to form a flat base with a 40.41 buy point, MarketSmith shows. Shares rallied more than 120% following a breakout from a cup base in late May.
Aggressive investors will note that VRT stock is clearing a trendline entry as it rebounds off its 10-week moving average. That plots a possible early entry at 39.23, according to Leaderboard analysis. The buy range for the early entry, which stretches 5% beyond the buy point, extends to 41.19.
Vertiv boasts robust institutional ownership, with 69% of its stock currently being held by funds, according to MarketSmith.
Vertiv has a perfect 99 Composite Rating, which combines various technical indicators into one easy-to-read score. Shares have an 81 EPS Rating based on its robust earnings gains. The relative strength line has been making outstanding progress and is near 52-week highs. VRT stock has a 99 RS Rating.
Vertiv rallied 188% year-to-date.
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