Images By Tang Ming Tung
Investment summary
My previous investment thought on Vertex, Inc. (NASDAQ:VERX) (published on 7th November) was a downgrade to a hold rating because I felt that the valuation was too high. I wouldn’t call this
Vertex: Expectations Reset With Improved Fundamentals (Rating Upgrade)
Summary
- I upgrade my rating for Vertex stock to buy due to the recent valuation pullback, creating an attractive entry point at 7x forward revenue.
- VERX's cloud growth momentum remains strong, with a 27% y/y increase in 4Q24 and management projecting 28% y/y growth for FY25.
- ERP migrations from SAP and Oracle provide a multiyear pipeline, with a $1.8 billion TAM through 2028, supporting ARR growth.
- ecosio offers significant long-term potential with a $7 billion TAM in e-invoicing, expected to grow to over $10 billion by 2028.
I focus on long-term investments while incorporating short-term shorts to uncover alpha opportunities. My investment approach revolves around bottom-up analysis, delving into the fundamental strengths and weaknesses of individual companies. My investment duration is the medium to long-term. Ultimately, I aim to identify companies with solid fundamentals, sustainable competitive advantages, and growth potential.
Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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