Vertiv's Earnings Estimates Raised By Analyst Amid Improved Margin Outlook

Core Viewpoint - BofA Securities analyst Andrew Obin maintains a Buy rating on Vertiv Holdings (VRT) with a price target of $150, reflecting optimism about the company's growth prospects and margin improvements [1]. Group 1: Revenue Growth and Forecasts - Vertiv's management has revised its organic revenue growth forecast to a 12%-14% CAGR from 2024 to 2029, an increase from the previous range of 8%-11% [1]. - This revised forecast is compared to BofA and consensus estimates of a 14% CAGR from 2024-2027, indicating a potential industry-wide constraint due to electricity availability and skilled labor shortages [2]. Group 2: Capital Expenditure and Capacity Expansion - Vertiv's capital expenditure is projected to rise to approximately 3.0% of revenue in 2025, up from 2.6% in 2024, signaling continued capacity expansion [2]. - The company is expected to increase its R&D and capacity investment to$ 150-200 million per year, up from the previous range of $75-125 million [4]. Group 3: Financial Performance and Margins - As of Q3 2024, Vertiv's gross equipment assets have grown by 25% year-over-year [3]. - Management has guided for an adjusted operating margin of over 25% by 2029, an improvement from the previous target of over 20% by 2028 [3]. - The adjusted EPS estimate for 2025 has been raised by$ 0.10 to $3.60, reflecting a 33% year-over-year increase, primarily driven by faster revenue growth [4]. - The adjusted EPS estimate for 2026 has also been increased by$ 0.15 to $4.40, representing a 22% year-over-year growth [5]. Group 4: Dividend Forecast - The dividend forecast has been raised to reflect a 50% increase to an annualized rate of$ 0.15 per share, coinciding with the Investor Day [5]. Group 5: Stock Performance - VRT shares are currently trading higher by 10.9% at $136.49 [6].