Vertiv(US:VRT) Tianfeng Securities·2024-10-30 11:49Investment Rating - The investment rating for Vertiv (VRT) is maintained at "Buy" with a target price of $131, indicating an expected return of over 20% within the next six months [1]. Core Insights - Vertiv reported Q3 FY24 revenue of $2.07 billion, a year-on-year increase of 19%, surpassing Bloomberg consensus expectations of $1.98 billion. Product revenue was $1.65 billion, exceeding expectations of $1.60 billion, while service revenue reached $420 million, above the expected $390 million. The growth was primarily driven by favorable shipment arrangements in the Americas and EMEA regions [1]. - The company raised its full-year revenue guidance from $7.67 billion to $7.81 billion, with organic growth rate guidance increased from 13% to 14%. Adjusted operating profit guidance was raised from $1.435 billion to $1.485 billion, and adjusted diluted EPS guidance was increased from $2.50 to $2.68 [1]. - The company highlighted strong demand indicators, with organic orders growing 17% year-on-year in Q3, and backlog orders increasing by 47% to $7.4 billion [1]. Summary by Sections Financial Performance - Q3 revenue was $2.07 billion, up 19% year-on-year, with a 19% organic growth rate, surpassing expectations [1]. - Operating profit was $380 million, a 47% increase year-on-year, exceeding expectations of $360 million [1]. - GAAP net profit was $180 million, below the expected $220 million [1]. Regional Performance - Americas Q3 revenue was $1.20 billion, with an organic growth rate of 21% and an adjusted operating margin of 25.3% [1]. - EMEA revenue was $440 million, with an organic growth rate of 25% and an adjusted operating margin of 25.9% [1]. - APAC revenue was $430 million, slightly below expectations, with an organic growth rate of 10% and an adjusted operating margin of 10.2% [1]. Business Dynamics - The company anticipates a coexistence of liquid cooling and air cooling technologies, projecting a market share of 70% for air cooling and 30% for liquid cooling [1]. - Capital expenditures for Q3 were $36 million, with a total of $106 million for the year, and a planned capital expenditure of around $200 million for 2024 [1]. - Cash and cash equivalents stood at $910 million, with a strategic focus on mergers and acquisitions rather than reducing financial leverage [1]. Q4 Guidance - Q4 revenue midpoint is projected at $2.14 billion, slightly below expectations, with an organic growth rate forecasted at 13% [1]. - Adjusted operating profit midpoint is expected to be $440 million, with an adjusted operating margin of 20.4% [1]. - Adjusted diluted EPS is projected at $0.82, in line with expectations [1].