Goldman refreshes its gold stocks outlook for 2025
On Wednesday, Keefe, Bruyette & Woods (KBW) increased its price target for Goosehead Insurance Inc . (NASDAQ:GSHD) to $127 from $110, while maintaining an Outperform rating on the stock. This adjustment follows the company’s reported earnings per share (EPS) and adjusted earnings before interest, taxes, depreciation, and amortization (AEBITDA) that surpassed market expectations.
The firm’s analyst highlighted Goosehead Insurance’s robust performance, noting that the company’s operating EPS and AEBITDA of $0.78 and $37.4 million, respectively, exceeded the consensus estimates of $0.38 and $21.4 million. The beat was attributed primarily to higher contingent commissions and better-than-expected core loss ratios excluding catastrophic events at carriers. The company maintains strong financial health with a current ratio of 2.34, indicating solid liquidity. InvestingPro subscribers can access 12 additional key insights about GSHD’s financial position.
Goosehead Insurance’s guidance for fiscal year 2025, which forecasts written premium growth of 22-28% and revenue growth of 11-22%, aligns with current market consensus. In response, KBW has modestly raised its forward AEBITDA estimates. The adjustments account for increased contingent commissions, higher commission rates, and more expense leverage, slightly offset by a projected dip in premium volumes.
The firm projects that Goosehead Insurance will achieve an average annualized revenue growth of 25% in 2025 and 2026. This expectation is compounded by an anticipated 100-150 basis points annual margin expansion, excluding contingents. The new price target of $127 is based on a 30x enterprise value to AEBITDA multiple for 2026, which reflects a slightly higher multiple. KBW justifies this increase with the company’s unique business tailwinds and efforts to diversify lead referral sources.
In other recent news, Goosehead Insurance reported a strong fourth-quarter performance, significantly exceeding earnings and revenue forecasts. The company announced an earnings per share (EPS) of $0.79, nearly doubling the analyst estimate of $0.40, and reported revenue of $93.9 million, surpassing the anticipated $78.61 million. The company’s total written premiums increased by 29% for the year, reaching $3.8 billion. Additionally, Goosehead’s net income more than doubled, amounting to $49.1 million, while its adjusted EBITDA rose by 43% to $99.9 million. Analyst Matthew Carletti from Citizens JMP raised the price target for Goosehead Insurance to $150, maintaining a Market Outperform rating, citing the better-than-expected contingent commissions as a key driver. Goosehead Insurance also projects total written premiums for 2025 to be between $4.65 billion and $4.88 billion, indicating organic growth of 22% to 28%. The company’s strong performance has been attributed to strategic investments in technology and an increase in the number of corporate agents. Goosehead Insurance remains financially solid with $58.0 million in cash and an unused line of credit of $74.8 million as of December 31, 2024.
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