Vertiv Holdings (VRT) posted strong Q1 results and raised its full-year earnings outlook, signaling continued margin expansion and solid growth momentum, UBS Securities said Wednesday in a note.

The company lifted its full-year adjusted earnings per share guidance to about $6.35 at the midpoint, 4% above consensus estimates, helped by 2% higher organic sales and an 80-basis-point improvement in adjusted operating margin, UBS said. The updated outlook implies incremental margins of 32%, up from 28% previously, the note said.

Q1 operating results came in 10% ahead of expectations, driven largely by stronger margins, while revenue was slightly above estimates, UBS said. Organic sales growth was modestly below elevated expectations, attributed to timing rather than softer demand, the note said.

The midpoint of Vertiv's Q2 EPS outlook at $1.40 is below the $1.43 consensus estimate, which may reflect initial conservatism from management, the note said.

UBS has a buy rating on Vertiv stock with a price target of $370.

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