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On Thursday, Stifel analysts maintained their Hold rating on Vertex (NASDAQ:VRTX) Inc. (NASDAQ: VERX) shares, with a steady price target of $31.00. The tax technology company, currently valued at $5.48 billion, is trading above its InvestingPro Fair Value, with notably high valuation multiples across several metrics. The decision followed Vertex’s first analyst day, where the company’s management presented its financial objectives for the year 2028. These goals include a growth rate of approximately 20% or higher for subscription and total revenue, as well as AEBITDA margins in the upper-20% range.
The analysts noted that Vertex’s current investments are expected to accelerate top-line growth and contribute to mid-term margin expansion. The company has demonstrated solid execution with current revenue growth of 16.49% and a healthy gross margin of 63.91%. A significant component of Vertex’s long-term revenue growth strategy involves ecosio, which currently has a low $20 million run rate but is projected to constitute 7-10% of the company’s 2028 revenue, equating to roughly $80-$100 million. This implies an annual growth rate of over 50% starting in 2026.
Vertex’s core business is anticipated to maintain a robust, long-term growth rate in the teens. However, Stifel analysts pointed out that due to the current investment cycle, accelerated growth is unlikely to materialize until the second half of 2026. Additionally, they mentioned that Vertex’s stock is currently trading at a somewhat premium valuation.
Given these factors, the analysts expect Vertex’s stock to remain range-bound in the upcoming quarters, mirroring the pattern observed during the 2021-2023 investment cycle. Despite this short-term outlook, the quality of Vertex’s underlying business was acknowledged, and the analysts expressed an intention to revisit their thesis as the anticipated revenue growth and margin inflection approaches in the forthcoming years. InvestingPro subscribers can access 12 additional key insights about Vertex, including detailed valuation metrics and growth projections in the comprehensive Pro Research Report, helping investors make more informed decisions about this evolving growth story.
In other recent news, Vertex Inc. reported its fourth-quarter 2024 earnings, exceeding analyst expectations with a revenue of $178.5 million, marking a 15.2% increase from the previous year. The company also reported an earnings per share (EPS) of $0.15, surpassing the forecasted $0.14. Despite this positive performance, the stock experienced a decline in pre-market trading. DA Davidson maintained a Buy rating on Vertex, though it adjusted the price target from $62 to $55, citing a reduction in bottom-line estimates and current market conditions. BMO Capital Markets also revised its price target for Vertex to $41 from $56, maintaining a Market Perform rating after the company missed its organic growth forecast by about one percentage point. Raymond (NSE:RYMD) James kept a Market Perform rating, highlighting Vertex’s long-term growth prospects and competitive advantages in the tax compliance market. Additionally, Vertex’s management outlined plans for continued investment in AI and e-invoicing technologies, aiming for future growth and market expansion. These developments come as the company prepares for its Investor Day, where more insights into its strategic initiatives are expected.
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