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Bull of the Day: Vertiv (VRT)

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Vertiv ((VRT - Free Report) ) is the $50 billion darling of the datacenter/AI buildout whose shares have more than tripled in the past year.

I know this well because my colleague Tracey Ryniec, strategist for the Zacks Value Investor portfolio, is holding open gains of over 500% for her members since buying VRT at $21 in June of 2023.

I also pay attention to Vertiv because they are a key provider of datacenter infrastructure solutions, including cooling needed for massive CPU and GPU clusters that run hot, like the NVIDIA hardware I am so fond of.

Vertiv Holdings offers hardware, software, analytics and ongoing services to the nation's hyperscale HPC (high performance computing) giants, many which occupy the Mag-7 stock group like Microsoft, Meta, Amazon, and Google.

Why VRT is Consistently a Zacks #1 Rank

Another colleague, Ben Rains who runs the Alternative Energy Innovators investment service, wrote about Vertiv as the Bull of the Day in early November. Here's some of what he he had to say...

Vertiv posted another beat-and-raise quarter on October 23, driven by “robust underlying demand” for its critical digital infrastructure products and services across its entire “AI-enabling portfolio of power, thermal, IT systems, infrastructure solutions and services.”

Vertiv operates in the background of big tech and AI, supporting the constant expansion and the day-to-day operations of data centers, communication networks, and beyond. Vertiv’s hardware, software, analytics, and ongoing services portfolio is focused on power, cooling, and IT infrastructure.

Vertiv’s business has never been more critical and in demand. The enormous expansion of data centers requires massive amounts of high-performance computing power that operates at peak performance 24/7.

Vertiv has partnered with the current titan of AI, Nvidia (
(NVDA - Free Report) ), to help solve future data center efficiency and cooling challenges.

The picks-and-shovels AI and data center company posted a beat-and-raise third quarter on October 23. “Robust underlying demand for our critical digital infrastructure products and services” fueled its most recent quarter, according to Vertiv CEO Giordano Albertazzi.

(end of excerpt from Ben's Nov 5 article; visit that link for plenty more fundamental charts and analysis)

Investor Day Inspires

Even though Ben did an excellent job giving us the bull case for VRT this month, I had to jump in here again with a fresh article because something big happened last week.

On November 18, Vertiv held an "investor day" for Wall Street institutions and analysts to hear presentations and speak with company executives.

The news was so good for the company's growth outlook, the next day shares rallied over 14% from $123 to $141. And analysts raised next year's EPS estimates from $3.50 to $3.58.

Vertiv offered a 2025 preliminary view that included EPS of between $3.50 and $3.60 a share, and organic sales growth between 16% and 18%.

Mizuho analysts raised their price target on Vertiv to $145 from $125 and reiterated an Outperform rating, noting how next year's outlook topped consensus estimates for earnings of $3.41 a share and organic sales growth of 16.2%, respectively.

Vertiv management also pushed out its longer term projections to 2029 from 2028 and boosted a variety of metrics including organic revenue growth and projected capital to deploy.

Tracey Ryniec Shares Her Investor Day Notes

Here's what the Biggest VRT Bull on the Street wrote in her commentary last week...

Some key notes from analysts:

1. Vertiv expects the data center market to grow 10% to 13% with 100 GW of capacity added through 2029.

2. Vertiv forecast its own sales growth to average around 13% annually through 2029 but the company has always been conservative on guidance so take that number with a grain of salt.

Revenue growth projections:

2023: $6.86 billion
2024E: $7.8 billion
2025E: $9.158 billion
2026E: $10.42 billion

For 2025, Vertiv expects sales growth to accelerate to 16% to 18%.

Vertiv highlighted its source offering field service headcount which was up 14% year-over-year, its service centers were up 29% and AI-focused training was up 370% year-over-year.

Liquid cooling product offerings have doubled year-over-year.

Just a reminder: 75% of Vertiv's revenue is data centers, with 25% thermal.

(end of Tracey's notes from her Value Investor portfolio service)

Bottom line: With Oracle's Larry Ellison telling us in October that he wants to build another 1,000 to 2,000 datacenters, all rumors about the AI bubble getting ready to pop are nonsense. I say buy VRT between $125 and $130.


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