Vertiv and Target have been highlighted as Zacks Bull and Bear of the Day

For Immediate ReleaseChicago, IL –November 26, 2024 – Zacks Equity Research shares Vertiv VRT, as the Bull of the Day and Target TGT, as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Ford F, General Motors GM and Tesla TSLA.Here is a synopsis of all five stocks:Bull of the Day:Vertiv is the $50 billion darling of the datacenter/AI buildout whose shares have more than tripled in the past year.I know this well because my colleague Tracey Ryniec, strategist for the Zacks Value Investor portfolio, is holding open gains of over 500% for her members since buying VRT at $21 in June of 2023.I also pay attention to Vertiv because they are a key provider of datacenter infrastructure solutions, including cooling needed for massive CPU and GPU clusters that run hot, like the NVIDIA hardware I am so fond of.Vertiv Holdings offers hardware, software, analytics and ongoing services to the nation's hyperscale HPC (high performance computing) giants, many which occupy the Mag-7 stock group like Microsoft, Meta, Amazon, and Google.Why VRT Is Consistently a Zacks #1 RankAnother colleague, Ben Rains who runs the Alternative Energy Innovators investment service, wrote about Vertiv as the Bull of the Day in early November. Here's some of what he he had to say...Vertiv posted another beat-and-raise quarter on October 23, driven by “robust underlying demand” for its critical digital infrastructure products and services across its entire “AI-enabling portfolio of power, thermal, IT systems, infrastructure solutions and services.”Vertiv operates in the background of big tech and AI, supporting the constant expansion and the day-to-day operations of data centers, communication networks, and beyond. Vertiv’s hardware, software, analytics, and ongoing services portfolio is focused on power, cooling, and IT infrastructure.Vertiv’s business has never been more critical and in demand. The enormous expansion of data centers requires massive amounts of high-performance computing power that operates at peak performance 24/7.Vertiv has partnered with the current titan of AI, Nvidia, to help solve future data center efficiency and cooling challenges.The picks-and-shovels AI and data center company posted a beat-and-raise third quarter on October 23. “Robust underlying demand for our critical digital infrastructure products and services” fueled its most recent quarter, according to Vertiv CEO Giordano Albertazzi.(end of excerpt from Ben's Nov 5 article; visit that link for plenty more fundamental charts and analysis)Investor Day InspiresEven though Ben did an excellent job giving us the bull case for VRT this month, I had to jump in here again with a fresh article because something big happened last week.On November 18, Vertiv held an "investor day" for Wall Street institutions and analysts to hear presentations and speak with company executives.The news was so good for the company's growth outlook, the next day shares rallied over 14% from $123 to $141. And analysts raised next year's EPS estimates from $3.50 to $3.58.Vertiv offered a 2025 preliminary view that included EPS of between $3.50 and $3.60 a share, and organic sales growth between 16% and 18%.Mizuho analysts raised their price target on Vertiv to $145 from $125 and reiterated an Outperform rating, noting how next year's outlook topped consensus estimates for earnings of $3.41 a share and organic sales growth of 16.2%, respectively.Vertiv management also pushed out its longer term projections to 2029 from 2028 and boosted a variety of metrics including organic revenue growth and projected capital to deploy.Tracey Ryniec Shares Her Investor Day NotesHere's what the Biggest VRT Bull on the Street wrote in her commentary last week...Some key notes from analysts:1. Vertiv expects the data center market to grow 10% to 13% with 100 GW of capacity added through 2029.2. Vertiv forecast its own sales growth to average around 13% annually through 2029 but the company has always been conservative on guidance so take that number with a grain of salt.Revenue growth projections:2023: $6.86 billion2024E: $7.8 billion2025E: $9.158 billion2026E: $10.42 billionFor 2025, Vertiv expects sales growth to accelerate to 16% to 18%.Vertiv highlighted its source offering field service headcount which was up 14% year-over-year, its service centers were up 29% and AI-focused training was up 370% year-over-year.Liquid cooling product offerings have doubled year-over-year.Just a reminder: 75% of Vertiv's revenue is data centers, with 25% thermal.(end of Tracey's notes from her Value Investor portfolio service)Bottom line: With Oracle's Larry Ellison telling us in October that he wants to build another 1,000 to 2,000 datacenters, all rumors about the AI bubble getting ready to pop are nonsense. I say buy VRT between $125 and $130.Bear of the Day:Target delivered Q3 earnings and sales misses last week and a cautious Q4 view. This resulted in a 22% drop in shares that are trying to recover this week off of new 52-week lows at $120.Our Director of Research, Sheraz Mian, chose Target and Walmart for a special compare/contrast in a recent dive into retail earnings. You can find that analysis here...Walmart & Target: A Closer Look at Retail EarningsMy objective today is to look at the analyst earnings revisions that have knocked Target into the cellar of the Zacks Rank.In the past week, thirteen covering analysts have taken the fiscal 2025 EPS consensus (ends January) down 8%, from $9.55 to $8.78.This drives the company's profit outlook to a -1.8% loss for the year. And the revenue picture also drops 1.2% negative for the fiscal year to $106 billion.But that wasn't enough for the retail spreadsheet jockeys. They also were in pretty strong agreement that next year will miss the prior forecast profit bullseye too.The EPS consensus for fiscal 2026 (begins February) dropped 10.6% from $10.57 to $9.45.Could it be that one of the strongest winners of retail in competition with Walmart has seen its best days from peak trailing 12-month sales at $109 billion in 2023?With flatlining sales and profits, it's possible. Be sure to dive into Sheraz's earnings autopsy to get the goods.Additional content:Ford Restructures European Operations: Should Investors Stay on Board?Ford is set to reduce its European workforce by around 4,000 employees, approximately 14% of its regional headcount, citing weak demand for electric vehicles (EVs), insufficient government support for the EV transition and competition from subsidized Chinese automakers. The layoffs, representing 2.3% of Ford's global workforce of 174,000, will primarily impact Germany and the U.K., with 2,900 and 800 positions cut, respectively. The U.S. auto giant plans to complete the layoffs by 2027. The move is part of the company’s restructuring program in Europe.Ford will also scale back production of its Explorer and Capri EV models at its Cologne facility. This move comes as Ford continues a costly restructuring of its European operations, which included 3,800 job cuts announced in early 2023 and the planned closure of its Saarlouis plant in Germany next year. According to Ford Europe vice president Peter Godsell, the company is grappling with weaker-than-expected demand for EVs and significant challenges around operating costs. This restructuring reflects Ford's broader effort to streamline operations and compete in a rapidly evolving automotive market.With EV operations under pressure and frequent layoffs to contain costs, investors are left questioning: Is Ford stock still a worthwhile investment or is it time for investors to rethink their positions?Challenges in Ford’s EV SegmentFord’s woes extend beyond Europe, with its EV business—operating under the Model e segment—struggling globally. In the third quarter, the unit reported an 11% year-over-year drop in wholesale volumes, a 33% decline in revenues and a loss of $1.22 billion before interest and taxes. The division is on track to incur a $5 billion loss this year, up from $4.7 billion in 2023 due to pricing pressure and costly investments in next-generation EVs.With President-elect Donald Trump set to remove EV tax credits, things may get even tougher for the company’s EV business. Trump’s push to repeal the $7,500 EV tax credit is likely to hurt U.S. legacy automakers like General Motors and Ford, which still lean heavily on EV tax credits. Ford faces stiff competition in the EV market, not only from established rivals like Tesla but also from emerging Chinese players who benefit from government subsidies and cost advantages.Inflation, Warranty & Material Costs to Add to Ford’s PainThe economic backdrop has further complicated Ford’s recovery efforts. Inflation, particularly in Turkey where Ford has a significant joint venture, has heightened cost pressures. Rising material costs for the Transit van, a key product in Europe, are expected to squeeze margins further. Additionally, the automaker has yet to address internal challenges, such as high warranty expenses stemming from quality issues with older models. These warranty-related costs could take up to 18 months to stabilize, adding to Ford’s financial strain.Amid these challenges, Ford has lowered its earnings before interest and taxes (EBIT) forecast for 2024. It now expects the metric to be around $10 billion, at the lower end of the previously guided range of $10-$12 billion. The company now expects EBIT from its Ford Blue unit, which focuses on internal combustion engine vehicles, to decline from $7.5 billion in 2023 to $5 billion this year.While Ford has achieved a $2 billion reduction in material and manufacturing costs, inflation and warranty-related expenses have offset these savings, limiting its ability to deliver record financial performance.Tough Road Ahead for FordThe road ahead for Ford is fraught with challenges. The automaker is caught in a perfect storm of external pressures, including intensifying competition, rising costs, weakening EV demand and internal inefficiencies such as warranty-related expenses.Year to date, shares of Ford have declined 8.3%, underperforming the industry, sector and the S&P 500. Meanwhile, its closest peer, GM, has seen its shares gain 63%. TSLA shares have also risen 42% during the same timeframe.Indeed, Ford’s Pro division, which focuses on commercial vehicles, remains a bright spot for the company. The unit has consistently delivered strong financial results, bolstered by robust demand for its fleet-oriented offerings. But that’s just one silver lining. While Ford is undertaking restructuring efforts, the magnitude of its challenges might overshadow these initiatives.Ford stock has been trading below its 200-day moving average for a long time.The Zacks Consensus Estimate for 2024 and 2025 EPS implies a decline of 10% and 4.4%, respectively. Discouragingly, Ford has seen its EPS estimates move south in the past seven days.Avoid F Stock for NowFor investors, Ford’s recent struggles present a cautionary tale. While the company’s Pro division and generous dividend yield offer some reasons for optimism, the broader challenges it faces cannot be ignored. Persistent EV losses, rising warranty expenses and cost pressures in a weakening automotive market paint a grim picture for Ford’s near-term prospects.As the automaker navigates turbulent waters, particularly in Europe where market dynamics are growing increasingly hostile, the decision to trim its workforce underscores deeper struggles. Until the company can demonstrate meaningful progress in addressing its challenges, investors may be better off avoiding Ford stockFord currently carries a Zacks Rank #5 (Strong Sell).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Why Haven't You Looked at Zacks' Top Stocks?Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.Today you can access their live picks without cost or obligation.See Stocks Free >>Media ContactZacks Investment Research800-767-3771 ext. 9339https://www.zacks.comZacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Ford Motor Company (F): Free Stock Analysis Report Target Corporation (TGT): Free Stock Analysis Report General Motors Company (GM): Free Stock Analysis Report Tesla, Inc. (TSLA): Free Stock Analysis Report Vertiv Holdings Co. 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