U.S. stocks lower as investors rotate out of tech ahead of Jackson Hole
On Thursday, UBS analysts maintained a positive outlook for Veritiv Corp (NYSE:VRTV), reasserting a Buy rating and a $135.00 price target for the company’s stock. The firm’s analysts highlighted a potential for significant growth in Veritiv’s organic orders, driven by capital expenditure plans of key data center and artificial intelligence companies.
UBS analysts noted that since their January 5th preview, which warned of possible short-term volatility due to a "potential for order deceleration," Veritiv’s stock value and forward valuation have both decreased by 15%. However, they now believe that the focus should shift from the fourth-quarter results to future prospects, where they see a very positive outlook. They predict that Veritiv’s organic orders could grow from $9.8 billion in 2024 to $11.9 billion in 2025, and further to $12.6 billion in 2026. This projection suggests a cumulative order growth of 30% by 2026 compared to 2024.
The UBS analysts also anticipate a near-term increase in orders for Veritiv, expecting a 20% sequential rise in the first quarter of 2025 compared to the fourth quarter of 2024. According to the analysts, this anticipated growth in orders could have a substantial positive impact on the company’s backlog, which in turn would positively influence both valuation and equity value.
This positive assessment by UBS comes despite recent market trends that have seen Veritiv’s stock and valuation take a hit. The analysts’ maintained price target of $135.00 reflects their confidence in the company’s ability to rebound and capitalize on the growing demands of the data center and AI sectors.
Veritiv Corp is a North American business-to-business distributor of packaging, facility solutions, print, and publishing products and services. The company’s performance is closely watched by investors seeking exposure to these industrial segments. With UBS’s renewed vote of confidence, Veritiv’s stock could be poised for recovery as it leverages its strategic position in the market to meet the increasing needs of its customers.
In other recent news, Vertiv Holdings (NYSE:VRT) Co reported fourth-quarter earnings that exceeded analyst expectations, driven by strong growth in data center markets. The company posted adjusted earnings per share of $0.99, surpassing the analyst consensus of $0.82. Revenue for the quarter reached $2.35 billion, beating expectations of $2.16 billion and marking a 26% year-over-year increase. Significant growth in the hyperscale and colocation data center market contributed to these results, with trailing twelve-month organic orders up approximately 30% compared to the previous year. Looking ahead, Vertiv projects first-quarter 2025 earnings per share between $0.57 and $0.63 on revenue of $1.9-1.95 billion. For the full year 2025, the company expects earnings per share of $3.50-$3.60 on revenue of $9.12-9.27 billion, indicating continued strong growth expectations. The adjusted operating margin expanded by 380 basis points to 21.5% in the fourth quarter, supported by volume growth and productivity gains. Vertiv concluded the quarter with a robust liquidity position of $2.0 billion and net leverage of approximately 1.0x.
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