UBS has recently initiated coverage of Vertiv Holdings Co., assigning a Buy rating and setting a price target of $155.00. The firm projects a remarkable 20% compounded annual growth in earnings per share (EPS) from 2024 to 2028, outpacing the average growth within the Electrical Equipment/Industrial Machinery (EE/MI) sector.
The optimistic forecast for Vertiv is largely attributed to its strong focus on data centers, which contribute to 75% of its revenue. The anticipated growth is expected to be driven by sustained double-digit market expansion each year, alongside solid earnings conversion.
UBS analysts believe that the upcoming Investor Event scheduled for November 18 in Atlanta could serve as a pivotal moment for Vertiv, potentially leading to upward revisions of the company's long-term financial targets.
Vertiv has recently reported impressive third-quarter earnings, showcasing a 19% increase in organic sales and a staggering 37% growth in orders. In light of these results, the company has raised its full-year guidance, now projecting a 14% organic growth rate and $1 billion in adjusted free cash flow.
This robust performance has prompted several financial institutions to maintain positive ratings and increase their price targets for Vertiv.
Vertiv's market performance has been remarkable, with a total return of 193.19% over the past year and a year-to-date return of 158.01%. The stock is currently trading near its 52-week high, reflecting strong investor interest and confidence in the company's future prospects.
Despite a high price-to-earnings (P/E) ratio of 80.5, the company's price/earnings to growth (PEG) ratio of 0.66 indicates that the stock may be undervalued relative to its growth potential. This discrepancy could support UBS's Buy rating and suggest further opportunities for share price appreciation.
The positive sentiment surrounding Vertiv is further reinforced by analysts' upward revisions of earnings forecasts for the upcoming period. Twelve analysts have adjusted their earnings estimates, aligning with UBS's projection of a 20% compound annual growth in EPS from 2024 to 2028.
Investors are keenly watching the upcoming Investor Event, where new financial targets are expected to be unveiled. As Vertiv continues to navigate the evolving landscape of data center solutions, its ability to adapt and innovate will be critical in maintaining its competitive edge and delivering value to shareholders.