BofA Securities analyst Andrew Obin reiterated the Buy rating on Vertiv Holdings VRT, with a price forecast of $150.
Obin writes that, management has revised its organic revenue growth forecast to a 12%-14% CAGR from 2024 to 2029, up from a previous range of 8%-11%.
This compares to BofA and consensus estimates of a 14% CAGR from 2024-2027.
The analyst attributes the revision to potential industry-wide constraints, such as electricity availability and skilled labor shortages.
Vertiv’s capital expenditure is projected to increase, with capex rising to approximately 3.0% of revenue in 2025, up from 2.6% in 2024, indicating a continued acceleration of capacity expansions.
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As of 3Q24, Vertiv’s gross equipment assets grew by 25% year-over-year, the analyst writes.
Management also guided for an adjusted operating margin of 25+% by 2029 (or sooner), an improvement from the previous target of 20+% by 2028.
This enhanced margin outlook is despite an increase in R&D and capacity investment, which is now expected to reach $150-200 million per year, up from the previous $75-125 million range, Obin adds.
The analyst raised the 2025 adj. EPS estimate by $0.10 to $3.60 (+33% year over year), driven largely by faster revenue growth.
Obin raised the 2026 adj. EPS estimate by $0.15 to $4.40 (+22% year over year).
The analyst also raised the dividend forecast to reflect the 50% increase to $0.15/share annualized rate in conjunction with the Investor Day.
Price Action: VRT shares are trading higher by 10.9% to $136.49 at last check Tuesday.
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