Investing.com -- Stifel downgraded Vertex (NASDAQ:VRTX), Inc to “Hold” from “Buy” and lowered its price target to $31 from $35, over the company’s investment strategy and valuation. While Vertex reported solid quarterly, Stifel noted its plan to accelerate 2025 investments in AI offerings and go-to-market efforts following its ecosio acquisition will weigh on margins. Shares were down 2%
The firm expects total investment dilution of $16-$20 million, alongside a back-end-loaded revenue growth profile for the year.
Stifel pointed out that during Vertex’s last major investment cycle from mid-2021 to mid-2023, the stock remained range-bound in the low $20s, with ARR growth steady but not accelerating. The firm now sees the stock lagging peers in the Office of the CFO category that offer higher growth or near-term margin expansion opportunities.
The revised $31 price target is based on a 6-times enterprise value-to-expected 2026 revenue multiple of $856 million. Stifel maintains a positive long-term view on Vertex’s tax compliance solutions and partner ecosystem but believes shares will struggle until ARR or margins re-accelerate.
Vertex reported solid fourth-quarter results with approximately 15% organic annual recurring revenue growth.
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