Oppenheimer analyst Noah Kaye initiated coverage on the shares of Vertiv Holdings (NYSE:VRT) with an Outperform rating and a price target of $96.
AI investments appear likely to support a tripling of installed data center capacity and double-digit TAM expansion for VRT over the next five years, noted the analyst.
The analyst expects infrastructure requirements for higher compute density to drive VRT’s wallet share expansion with an opportunity of $500,000/MW.
Increasing rack power density, rising cost of downtime and thermal demand driving liquid cooling adoption are some of the examples.
With higher rack power densities driving 40% CAGR for liquid cooling through 2028, VRT has shown agility in developing liquid cooling solutions in collaboration with chip makers, asserted the analyst.
The analyst sees FY23’s operational turnaround (+760 basis points margin expansion y/y) as sustainable under current management, reflecting improving organizational discipline.
The analyst expects VRT to deliver top line growth and margin expansion at or above the high end of FY24 guidance.
While anticipating an uneven pace of market growth, the analyst noted VRT’s application expertise, innovation and co-engineering capabilities will be critical to helping customers solve the challenges of building AI for the physical world.
Price Action: VRT shares are trading higher by 5.73% at $85.31 on the last check Friday.