Vertex Stock Plunges After Slashing Cloud Growth Outlook

Shares of Vertex Inc. (NASDAQ:VERX) plunged over 13% in trading on Tuesday after the tax software provider reported a slowdown in its cloud business and cut its full-year growth forecast. The disappointing outlook prompted several Wall Street analysts to lower their price targets on the stock.

Guidance and Company Commentary

Following its second-quarter results, Vertex management significantly reduced its fiscal 2026 cloud growth guidance to 18%, down from a previous forecast of 25%. The company attributed the revision to a slower pace of cloud conversions as clients re-evaluate IT spending and delay migration projects.

According to a note from DA Davidson, management is now focused on improving its cross-sell and upsell execution to drive growth. The firm also noted that any revenue contribution from artificial intelligence initiatives remains in the early stages.

Wall Street Reacts

The revised forecast led multiple investment firms to adjust their expectations for the stock's performance. While most analysts maintained their overall ratings, they lowered their price targets, reflecting concerns about the near-term growth trajectory.

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Notable price target adjustments included:

• DA Davidson: Cut to $12 from $15, maintaining a Neutral rating.
• Baird: Cut to $17 from $19, maintaining an Outperform rating.
• Stephens: Cut to $18 from $20, maintaining an Overweight rating.

In a slightly different take, BMO Capital raised its price target to $15 from $14 but kept its Market Perform rating. The firm acknowledged headwinds from "elongated deal cycles and uneven cloud migration trends" but saw potential catalysts from scaling e-invoicing services and progress on its AI product roadmap.

Executive Appointments

Separately, Vertex announced three appointments to its leadership team. The company named Chatelle Lynch as Chief People Officer, Carlos Mercuriali as Senior Vice President and Regional Manager of Europe, and Bala Chandran as Chief Product and Technology Officer.