Vertiv Posts Earnings Beat. The Stock Falls Anyway

Vertiv stock fell after the power and cooling equipment maker posted third-quarter earnings that beat analysts’ estimates.

Vertiv’s adjusted earnings in the period were 76 cents a share on sales of $2.07 billion, beating expectations for adjusted earnings of 69 cents a share on sales of $1.98 billion.

Despite the beat, Vertiv stock fell 4.3% to $107.66 in premarket trading.

Vertiv raised 2024 guidance across all financial metrics and said 2025 organic sales growth was expected to accelerate from 14% in 2024.

Vertiv stock has gained 134% so far this year.

Vertiv Holdings, a leading provider of power and cooling equipment for data centers, is a clear potential winner from investment in infrastructure for artificial intelligence. Its earnings, due before the market opens on Wednesday, could offer clues about the pace of the buildout.

Equipment for data centers accounts for 75% of Vertiv’s sales.

The analyst consensus is for Vertiv to report $1.98 billion of revenue for the quarter through September, with adjusted earnings per share of 69 cents. Analysts’ estimates for the current quarter’s revenue are for $2.16 billion in revenue and EPS of 75 cents.

Earlier this month, Jefferies analyst Saree Boroditsky initiated coverage for Vertiv with a Buy rating and $125 price target. “Vertiv is best positioned in our coverage to benefit from the rise in data center capacity,” she wrote.

As the close on Tuesday, Vertiv stock was up 134% this year, compared with the 24% gain for the Nasdaq Composite.

The analyst said demand for AI processing power is driving demand for Vertiv’s products. The latest AI servers generate more heat than traditional computing systems, so they require more cooling. She estimates the company’s earnings will grow by 24% a year through 2027.

Boroditsky also cited the advantage of the company’s more than 3,750 field-service employees and 300 service centers for cooling system maintenance.

“We believe our forecast is conservative,” she wrote, adding that earnings could grow faster if Vertiv buys back stock or makes acquisitions, or if customer demand comes in higher.