On Tuesday, Mizuho (NYSE:MFG) Securities exhibited confidence in Vertiv Holdings Co. (NYSE: NYSE:VRT), as the firm increased its price target for the company's shares to $145.00, up from the previous target of $125.00. The Outperform rating on the stock has been sustained.
The adjustment follows the attendance of Mizuho's analyst at Vertiv's 2024 Investor Day in Atlanta, Georgia. During the event, Vertiv's management team presented their strategic vision and financial goals, which now extend through 2029. The company's preliminary financial framework for 2025 was highlighted to be above the consensus for adjusted earnings per share (EPS) and growth.
Vertiv's long-term financial plan suggests higher-than-expected organic growth, specifically in the mid-teens range, and operating profit margins. The analyst believes that the outlook for the company is not only reasonable but also potentially surpassable, particularly with a strong perspective for 2025 that could bolster the success in later years of the compound annual growth rate (CAGR) forecast.
Furthermore, Vertiv's available capacity has been significantly increased to $12.5 billion, up from $6.5 billion, a move supported by growth in EBITDA and leverage. This expansion is projected to lead to over $7 of earnings power by the year 2029. In response to these developments, Mizuho has revised its EPS estimates upwards to $3.57 for 2025 (previously $3.25) and to $4.30 for 2026 (previously $3.80).
The analyst's report suggests that Vertiv's unique algorithm and the ongoing momentum in artificial intelligence, coupled with the rise in data intensity, will continue to set the company apart from its competitors. The new price target of $145 is based on applying a 28x price-to-earnings (P/E) ratio, discounted back three years. The firm reiterates its Outperform rating, indicating a positive outlook on Vertiv's stock performance.
In other recent news, Vertiv Holdings Co. reported strong third-quarter earnings, displaying a 19% increase in organic sales and a 37% growth in orders. The company also revised its full-year guidance, now forecasting a 14% organic growth and $1 billion in adjusted free cash flow. Vertiv also announced the promotion of Scott Armul to executive vice president, global portfolio and business units. In addition, Vertiv revealed plans to expand its liquid cooling capacity by 45 times by the end of 2023 and a strategic partnership with NVIDIA (NASDAQ:NVDA) to co-develop power and cooling solutions.
Analyst firms UBS, TD Cowen, Mizuho Securities, and Oppenheimer have maintained positive ratings and raised price targets for Vertiv. UBS began coverage of Vertiv, forecasting a 20% compounded annual growth in earnings per share (EPS) from 2024 to 2028. TD Cowen raised its price target to $115, Mizuho Securities lifted the price target to $125 and set the 2025 EPS at $3.25, and Oppenheimer increased its price target to $121.
InvestingPro Insights
Vertiv Holdings Co. (NYSE: VRT) has been demonstrating strong financial performance, aligning with Mizuho Securities' optimistic outlook. According to InvestingPro data, Vertiv's revenue growth stands at 13.2% for the last twelve months, with an impressive quarterly revenue growth of 18.99% in Q3 2024. This robust growth trajectory supports the company's ambitious organic growth projections mentioned in the article.
InvestingPro Tips highlight that Vertiv's net income is expected to grow this year, and 12 analysts have revised their earnings upwards for the upcoming period. These tips corroborate Mizuho's increased EPS estimates for 2025 and 2026. Additionally, Vertiv's strong return over the last three months, with a 56% price total return, reflects the market's positive reception of the company's growth strategy and AI-driven momentum.
While the article focuses on Vertiv's future potential, it's worth noting that the company currently trades at a high P/E ratio of 79.52, according to InvestingPro data. This valuation suggests that investors are pricing in significant future growth, aligning with the company's ambitious long-term financial plan outlined at the Investor Day.
For investors seeking a more comprehensive analysis, InvestingPro offers 17 additional tips for Vertiv Holdings Co., providing a deeper understanding of the company's financial health and market position.
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