Key Takeaways
- Vertiv’s stock is 46% below its May high, even after third-quarter sales rose 61% and organic orders more than doubled.
- Bernstein kept its Outperform rating and $376 target on Nov. 11, 82% above today’s price, and calls the political threat to US data-center construction overblown.
- Analysts keep raising their earnings estimates, yet the stock trades at 21x forward earnings, below its five-year average of 27x.
- Bernstein’s call looks right, but Vertiv no longer reports orders each quarter, so its first 2027 outlook in February is the next real test.
Vertiv (VRT) grew third-quarter sales 61% and raised its full-year guidance, and its stock is still 46% below its May high.
Bernstein thinks the market has this wrong. On Nov. 11, it kept its Outperform rating and $376 price target on Vertiv, 82% above today’s price.
Then came the midterms
The slide began in the summer, when second-quarter sales of $3.27 billion missed the $3.35 billion midpoint of management’s guidance on what it called timing shifts in large projects. Vertiv made up for it in the third quarter. Sales of $4.31 billion beat the $3.85 billion top of the guide, and the CFO said $100 million to $150 million of the delayed revenue landed in the quarter.
Then Democrats won Congress in the Nov. 3 midterms, reviving fears that Washington could slow US data-center construction. In Texas, Governor-elect Gina Hinojosa won on a promise of a moratorium on data-center construction.
Bernstein says the politics are overblown
Bernstein laid out its case in a note on the eve of the vote. It counted 244 gigawatts, about 56% of the 433-gigawatt US data-center pipeline, in places exposed to political risk. But it expects officials to make developers pay more of the power and grid-upgrade costs rather than halt projects, and it sees that cost as relatively immaterial. After the results, it put the exposed pipeline at 306 gigawatts and the hit to US data-center capacity at just 2% to 4%.
TIKR tracks 30 analysts on Vertiv. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on Vertiv, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See Vertiv’s Analyst Ratings
Can Vertiv get to $376?
Wall Street’s average target has held up far better than the stock:
At $338, it’s down from its mid-July peak of $381 but still 63% above today’s price. Thirty analysts cover Vertiv, with targets from $250 to $427.
And the earnings under those targets keep rising:
Analysts now expect $9.84 a share for 2027, up from $9.18 a month ago, and $12.54 for 2028.
Investors won’t pay as much for those earnings:
At the last close, Vertiv traded at 21x forward earnings, below its five-year average of 27x and far off May’s 55x peak.
Bernstein’s $376 over the $9.25 a share analysts expect over the next 12 months comes to 41x. That’s a lot today. But a year from now, the 12 months ahead will lean mostly on 2028, so Vertiv would need a much lower multiple to reach $376, closer to its usual range.
I’d side with Bernstein
Vertiv has stopped reporting orders each quarter, so a Texas moratorium would likely show up first in guidance. JPMorgan is cooler on the stock: it resumed coverage the same day with a Neutral rating and a $240 target.
Still, the market is pricing Vertiv for a slowdown that its orders, its guidance and analysts’ estimates don’t show. Organic orders more than doubled last quarter. To reach $376, Vertiv needs estimates that hold and a multiple near its usual range a year from now, and I think it gets both. The next real test is the fourth-quarter report in February, with Vertiv’s first outlook for 2027.
So what is Vertiv stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
