Wall Street is turning more bullish on a little-known stock with ties to Nvidia that’s been on a blowout run, with one bull case scenario estimating that shares can nearly double. Liquid cooling stock Vertiv has soared more than 480% over the past year and Wall Street sees more tailwinds, with 92% of analysts rating it the equivalent of a buy. Shares have surged 62% this year alone. VRT YTD mountain Vertiv shares year to date Underpinning the investment case is a bet on liquid cooling as semiconductor makers hunt for ways to power and cool their increasingly advanced models, with Nvidia’s new GB200 NVL72 server rack system incorporating the technology. “We view VRT as a unique way for investors to play a multitude of secular themes related to data center growth (hyperscale and beyond), particularly in an AI-centric environment,” said Evercore ISI’s Amit Daryanani in a recent note, calling Vertiv a key beneficiary of the transition to liquid cooling from air. Earlier this month, Daryanani spotlighted the stock as an alternative way to invest in the growth of data centers, estimating that Vertiv could reach $150 in the most optimistic bull scenario, and earn $6 a share or more at the end of the next three years. That share price target implies about 95% upside from Tuesday’s close. He estimates the the thermal management industry alone could represent a $13 billion total addressable market for Vertiv, and that Nvidia’s latest server system highlights the need for direct-to-chip liquid cooling technologies across the industry. “On the data center physical infrastructure side, we think VRT is perhaps the best positioned company to benefit from the AI tailwinds with leverage towards large-scale hyperscale-driven contracts as well as market leadership in both power and thermal management,” Daryanani said in a recent note. Evercore ISI isn’t alone in anticipating a strong glidepath for Vertiv. Bank of America’s Andrew Obin boosted his price objective to $90 a share this week, estimating that revenue growth can accelerate at a 12% compound annual growth rate between 2023 and 2026. The estimate doesn’t account for Nvidia’s B100 chips, which could lift the forecast to an 18% CAGR. Goldman Sachs analyst Mark Delaney highlighted strong order demand and a significant 16% year-over-year backlog increase as a sign of Vertiv’s growth potential in 2024 and beyond. VRT 1Y mountain Vertiv shares over the last year “Moreover, Vertiv has seen continued solid pricing, which we believe will support strong revenue/margins not only in 2024 but also into 2025,” he wrote in a February note. To be sure, Vertiv’s recent rally has encountered obstacles, with shares dropping about 6% one day in February after a lackluster fourth-quarter earnings report. Even so, Wall Street remains bullish on the stock, with JPMorgan’s Stephen Tusa recently highlighting the company as a “multi year growth story” and “leading global supplier.” “When all is said and done, we walk away with more confidence in the thesis of positive [data center] demand momentum and that price could provide substantial margin tailwinds,” wrote Wolfe Research’s Nigel Coe in a February note.
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