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What happened

VTEX (NYSE: VTEX) stock is posting big gains in Wednesday’s daily trading session. The company’s share price was up 9.2% as of 2:45 p.m. ET, according to data from S&P Global Market Intelligence.

VTEX is gaining thanks to favorable coverage from an analyst. A UBS analyst published a note today upgrading his rating on the stock from “neutral” to “buy,” and investors are excited about his view on the company.

So what

UBS’s Leonardo Olmos issued new overage on VTEX stock today, pushing the stock into the “buy” category and raising the company’s price target on the stock. Olmos now expects its share price to hit $7.50 per share within the next 12 months, up from his previous one-year target of $4.70 per share. Even with today’s gains, the analyst’s price target implies potential upside of roughly 18%.

Now what

With its recent second-quarter earnings report, VTEX grew revenue 23.7% year over year to reach $47.9 million and saw total gross merchandise volume (GMV) conducted across its platform rise 23.4% year over year to reach $3.8 billion. Olmos believes that the company can sustain high levels of revenue expansion while also improving its margins.

The analyst also anticipates that the company can grow its free cash flow at a greater-than 30% annual rate through 2025.

VTEX PS Ratio (Forward) data by YCharts.

Even with some strong share-price gains recently, VTEX stock still trades down roughly 80% from the lifetime high that it hit in August 2019.The company is now valued at roughly six times this year’s expected sales.

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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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