On Thursday, TD Cowen adjusted its outlook on Vertiv Holdings Co. (NYSE:VRT), raising the stock's price target to $93 from $89 while maintaining a Buy rating.
This revision follows Vertiv's announcement of robust second-quarter results for 2024, showcasing a significant increase in order growth of 57% year-over-year and a sequential 10% rise from the previous quarter. The company also updated its 2024 guidance to reflect this positive momentum.
Vertiv's updated guidance for the third quarter of 2024 predicts order growth ranging between 10-15% year-over-year. Despite this forecast leading to a decline in the company's stock value, TD Cowen perceives the projection as cautious.
The firm's analysis, based on channel checks, indicates sustained demand in the hyperscale data center (DC) market. The forward demand pipeline is expected to support an acceleration in demand, reinforcing the firm's Buy rating for Vertiv's shares.
The analyst from TD Cowen highlighted the strong performance of Vertiv in the second quarter of 2024, which outpaced expectations and contributed to the improved outlook for the year. With the demand for hyperscale data centers remaining robust, the analyst believes that Vertiv is well-positioned to capitalize on the industry's growth.
Vertiv's financial health appears to be on solid footing, with the raised 2024 guidance serving as a testament to the company's operational strength. The firm's commentary suggests confidence in Vertiv's ability to continue its growth trajectory, despite the conservative estimate for the upcoming third quarter.
In other recent news, Vertiv Holdings Co has reported significant growth in its second quarter of 2024, with a notable 14% increase in organic sales. This increase was primarily driven by growth in the Americas and EMEA regions.
The company's adjusted operating profit also saw a significant rise, reaching $382 million, and margins expanded to 19.6%. In light of these promising results, Vertiv has raised its full-year guidance, demonstrating confidence in its future performance.
Orders surged by 57% year-on-year and 10% sequentially, and Vertiv's full-year guidance now expects organic growth at 13%, adjusted operating profit at $1.435 billion, and adjusted free cash flow at $875 million. This positive outlook is largely attributed to the expanding data center industry and Vertiv's strengthening market share.
Despite a decrease in the APAC region for Q2, Vertiv is showing promise in the liquid cooling market and expects operating margins to expand in the APAC region in the second half of the year. The company also projects an adjusted diluted EPS of $2.50 for the year, a 40% increase from the previous year.
InvestingPro Insights
As Vertiv Holdings Co. (NYSE:VRT) demonstrates strong performance and growth potential, a closer look at real-time data and expert analysis from InvestingPro can provide deeper insights for investors. The company's market capitalization stands at a robust $29.42 billion, reflecting investor confidence and the scale of its operations. Despite a high P/E ratio of 71.33, the adjusted P/E ratio for the last twelve months as of Q2 2024 is more favorable at 58.43, suggesting that earnings growth may be on the horizon.
InvestingPro Tips highlight that analysts are optimistic about Vertiv's future, with four analysts revising their earnings upwards for the upcoming period and expectations of net income growth this year. Additionally, Vertiv's revenue has grown by 12.66% over the last twelve months as of Q2 2024, indicating a solid financial trajectory. However, the stock is currently trading at a high Price / Book multiple of 19.13, which could signal that it is valued richly relative to its book value. This juxtaposition of a high earnings multiple and a strong revenue growth rate presents a nuanced picture for potential investors.
For those interested in a comprehensive analysis, InvestingPro offers a total of 15 additional tips for Vertiv, which can be accessed through their platform, providing a more detailed understanding of the company's financial health and market position. To gain access to these exclusive insights, use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
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