Vertiv Faces Spending Pullback, Supply Woes & Potential Asia-Pacific Slowdown, Says Analyst

  • Mizuho analyst Brett Linzey reiterated a Neutral rating on the shares of Vertiv Holdings Co VRT with a price target of $10.00.
  • The company had announced that its CEO Rob Johnson, will be stepping down due to health reasons effective December 31, 2022.
  • His successor Giordano Albertazzi, the analyst says, will be focused on continuing to execute the current strategies in place.
  • Linzey said Vertiv, though reaffirmed its Q3 guidance, expected results to be at the lower end of the range primarily from FX headwinds.
  • Though its FY23 operating profit guidance of $730 million - $750 million, the analyst thinks, is plausible, with price finally catching up and operational issues getting ironed out, this creates a high bar heading into next year amid a slowing global backdrop.
  • Linzey lists pullback in hyperscale data center spending, sharper slowdown in the Asia Pacific, which is 25% of the portfolio, and lingering supply challenges that limit the ability to serve the customer and convert orders as potential risks.
  • Lower business confidence could also support reduced capital expenditure activity, and product deficiencies that flare up could impede the ability to compete on new products, added the analyst.
  • Price Action: VRT shares are trading higher by 5.64% at $11.89 on the last check Tuesday.
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