Vertex (VERX – Research Report), the Technology sector company, was revisited by a Wall Street analyst today. Analyst Brad Reback from Stifel Nicolaus downgraded the rating on the stock to a Hold and gave it a $31.00 price target.
Brad Reback has given his Hold rating due to a combination of factors impacting Vertex’s future performance. The company reported strong fourth-quarter results with approximately 15% organic ARR growth. However, management’s decision to significantly increase investments in AI offerings and go-to-market efforts following the ecosio acquisition has led to a projected dilution of $16-$20 million. This, combined with a back-end loading of 2025 revenue growth and a high valuation, has prompted a more cautious outlook.
Reback notes that a similar investment strategy in the past resulted in the stock trading within a narrow range, with ARR growth remaining stable but not accelerating. Until there is a noticeable improvement in ARR or margins, Vertex’s stock may underperform compared to its peers in the Office of the CFO sector, which are experiencing higher growth rates and better near-term margins. Consequently, the target price has been adjusted to $31, reflecting a valuation of 6x CY26e EV/Revs and approximately 40x CY26c EV/FCF.
In another report released today, BMO Capital also maintained a Hold rating on the stock with a $41.00 price target.
Based on the recent corporate insider activity of 86 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of VERX in relation to earlier this year.