TLDR

  • Vertiv (VRT) will become a member of the S&P 500 on March 23 as part of the index’s quarterly reshuffle
  • VRT shares climbed more than 7% on Monday after the news broke
  • Lumentum (LITE) jumped 10.6%, while EchoStar (SATS) advanced 1.6% on the same announcement
  • Match, Molina Healthcare, Lamb Weston, and Paycom Software are being removed from the S&P 500
  • Broader S&P 500 futures declined 1.1% as oil prices surpassed $100 a barrel amid the Iran conflict

Vertiv Holdings $VRT gained over 7% on Monday following confirmation from S&P Dow Jones Indices that it will enter the S&P 500 on March 23. This change is part of the index’s standard quarterly rebalancing.

Vertiv Holdings Co, VRT
VRT Stock Card

The announcement was made after the market closed on Friday, allowing investors the weekend to consider the development. By Monday’s premarket session, VRT was already trading higher.

Lumentum Holdings $LITE saw the largest increase among the group, rising 10.6% in premarket activity. EchoStar $SATS added approximately 2.1%. All three companies will formally join the index when the market opens on March 23.

Lumentum’s competitor Coherent $COHR declined 0.5%, standing out as the only company in the optical networking sector to lose ground on the news.

Additions to major indexes frequently prompt automatic purchases by funds that mirror the S&P 500. This passive buying pressure can elevate share prices in the weeks preceding the official inclusion date.

Stocks Leaving the S&P 500

The news was not positive for all. Match, Molina Healthcare $MOH, Lamb Weston $LW, and Paycom Software $PAYC are all transitioning to smaller indexes as part of the same rebalancing.

Match declined 2.5% in premarket trading. Paycom dropped 2.1%. Molina decreased 0.9%. Lamb Weston was an exception, posting a marginal 0.1% increase.

The wider market also struggled on Monday. S&P 500 futures were 1.1% lower as the war in Iran drove oil prices over $100 per barrel.

VRT had been performing strongly ahead of this announcement. The stock has increased 23.6% in the last month, 37.7% since the start of the year, and more than 210% over the past twelve months.

Its most recent closing price was $241.78. The average analyst price target is $263.20, meaning the stock trades about 8% below that level.

Vertiv’s AI Data Center Push

A key driver behind VRT’s recent performance is its growing involvement in AI infrastructure. The company manufactures power and cooling systems for data centers, an area receiving significant investment as AI applications expand.

Vertiv has been broadening its range of modular power and cooling products and establishing new partnerships within the industry. It is also focusing on markets with limited power grid capacity, where large-scale AI projects are increasing demand for electricity.

The company’s P/E ratio is 69.4x, significantly higher than the industry average of 31.3x. Recent stock sales by some company insiders have been noted by analysts as a point to monitor following the substantial price appreciation.

Analyst price targets vary widely from $155 to $320, indicating divergent opinions on the stock’s current valuation.

VRT’s addition to the S&P 500 will be effective at the start of trading on March 23.