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Investing.com - B.Riley initiated coverage on Hippo Holdings Inc (NYSE:HIPO) Monday with a Buy rating and a $35.00 price target, implying a potential 20% upside from current levels. The stock, currently trading at $27.93, has shown impressive momentum with a 62.48% return over the past year. According to InvestingPro analysis, Hippo appears slightly undervalued based on its Fair Value metrics.
The price target represents 2.5 times book value per share of $12.83 plus $3.20 per share net present value of net operating losses, according to B.Riley’s analysis. The firm highlighted Hippo’s guidance for 2028 adjusted earnings per share of approximately $4.00 and forecasts 2028 revenue exceeding $1.0 billion. This ambitious outlook builds on the company’s current strong revenue growth of 55.8% over the last twelve months, though InvestingPro data shows the company is not yet profitable, with an EBITDA of -$88.2 million.
Hippo is positioned as a tech-enabled homeowner’s insurance company with differentiated distribution through homebuilder partnerships. The company’s smart home technology enables loss mitigation offerings that are gaining market traction, B.Riley noted. InvestingPro’s analysis indicates a FAIR overall Financial Health score, suggesting the company maintains stable operations despite current losses. Get access to 6 more exclusive ProTips and comprehensive analysis in the Pro Research Report.
The research firm also pointed to Hippo’s ownership of the Spinnaker fronting platform, which it believes is underappreciated by investors. While Hippo faced insurance loss and capital market headwinds after going public via SPAC in early 2021, B.Riley views the current market environment as favorable.
B.Riley indicated that Hippo’s recent investor day on June 12 established a foundation for profitable growth in the homeowner’s insurance market. Hippo shares closed at an undisclosed price on Monday.
In other recent news, Hippo Holdings Inc. reported a notable 30% year-over-year increase in revenue, reaching $110 million for the first quarter of 2025. Despite this growth, the company experienced a widened net loss of $48 million, up $12 million from the previous year, primarily due to increased expenses and challenges in catastrophe-prone areas. The company’s Insurance as a Service revenue surged by 91%, contributing significantly to the overall revenue increase. Hippo Holdings projects full-year 2025 revenue between $465 million and $475 million and aims to achieve net profitability by the fourth quarter of 2025. The company also plans to expand its home insurance program while reducing exposure to high-risk areas. Analysts from KBW and Jefferies inquired about the company’s financial strategies, including the issuance of a $50 million surplus note to support growth in its Spinnaker platform. Hippo Holdings remains focused on improving its financial metrics and achieving its profitability targets by the end of the year.
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