Key Points
TD Cowen initiated coverage on Vertex stock.
Vertex stock is trading at a discount to its historical valuation.
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Starting the week on an auspicious note, Vertex (NASDAQ: VERX) stock is rising this morning. Shares of the software company are bouncing higher after an analyst initiated coverage with a bullish outlook.
As of 11:02 a.m ET, shares of Vertex are up 4.4%, retreating from an earlier gain of 7.5%.
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This firm sees strong revenue growth ahead
Initiating coverage today with a buy rating, TD Cowen assigned a $14 price target to Vertex, a software specialist that helps businesses maintain compliance with tax laws. TD Cowen based its bullish outlook on the belief that the company can maintain double-digit revenue growth through fiscal 2028 and possible beyond.
Based on Vertex's stock closing at $11.37 on Friday, TD Cowen's $14 price target implies upside of 23.1%.
TD Cowen's price target is consistent with other firms. In early May, for example, Jefferies and Morgan Stanley assigned price targets of $14 and $19, respectively.
Is Vertex stock a buy after today's news?
Underperforming the market, Vertex stock has suffered in 2026, falling more than 41% year to date as of this writing. While the company achieved growth across several metrics in the first quarter of 2026, investors remain skeptical. Vertex reported net revenue retention of 105% in Q1 2026, down from 109% during the same period last year.
Although the company's decline in net revenue retention is undesirable, it reported strong sales and free cash flow growth in Q1 2026. With shares of the tech stock trading at 11.8 times operating cash flow -- a discount to its five-year average cash flow multiple of 31.8 -- now looks like a good time to consider a position while the stock is sitting in the bargain bin.
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Scott Levine has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Jefferies Financial Group. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
