Goosehead stock target raised to $150 by JMP after earnings beat

Tuesday, Goosehead Insurance Inc . (NASDAQ:GSHD), a $3.94 billion market cap insurance company, saw its price target increased by JMP Securities from $125 to $150, maintaining a Market Outperform rating. The adjustment follows the company’s robust quarterly earnings report, which surpassed analysts’ expectations. According to InvestingPro data, the stock has shown strong momentum with a 39% gain over the past six months, despite a recent 10% pullback last week.

Matthew Carletti, a JMP Securities analyst, noted that Goosehead’s Operating EPS of $0.79 was significantly higher than their $0.39 estimate and the consensus of $0.40. The surprise came largely on the back of contingent commissions in the corporate channel, which at $24 million, greatly exceeded the $7.4 million that was estimated. Total (EPA:TTEF) revenues for the company reached $93.9 million, surpassing both JMP’s forecast of $78.3 million and the consensus figure of $77.6 million. InvestingPro analysis reveals the company maintains a healthy financial position with a "GOOD" overall score, though it trades at a relatively high P/E ratio of 138x.

While core revenues were slightly below expectations at $68.0 million, compared to the anticipated $68.8 million and consensus of $69.7 million, the company’s total written premiums presented a brighter picture. These premiums, a critical performance indicator for future revenues, amounted to $966 million, marking a 27.7% increase. This figure surpassed the estimated $928 million and a 22.7% growth expectation. Carletti attributed this success to recent investments and strategic repositioning in both the Corporate and Franchise channels, which have led to enhanced productivity and improved product availability in several previously constrained markets. For deeper insights into Goosehead’s valuation and growth metrics, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro, which covers over 1,400 US stocks with expert analysis and actionable intelligence.

In terms of profitability, Goosehead’s Adjusted EBITDA reached $37.4 million, comfortably beating JMP’s estimate of $23.7 million and the consensus of $21.4 million. Additionally, the company reported a 13% increase in policies in force, which now total 1.636 million.

The analyst’s commentary underscores the effectiveness of Goosehead’s recent business strategies and the company’s ability to generate revenue growth despite market constraints. The revised price target reflects confidence in Goosehead’s continued performance and market position.

In other recent news, Goosehead Insurance Inc. reported impressive financial results for the fourth quarter of 2024, significantly exceeding market expectations. The company achieved an earnings per share (EPS) of $0.79, nearly double the anticipated $0.40, while revenue reached $93.9 million, surpassing the forecasted $78.61 million. This performance was driven by a 20% increase in total revenue and a 29% rise in premiums, contributing to a record EBITDA margin of 32%. Looking ahead, Goosehead projects 2025 revenue between $350 million and $385 million, indicating an 11-22% organic growth. Additionally, the company expects premiums to grow between 22% and 28%, reaching up to $4.88 billion. Analysts have noted the company’s strong financial health, with firms like KBW expressing surprise at the high contingent commissions due to improved carrier loss ratios. Goosehead’s expansion efforts include enhancing its franchise distribution and leveraging advanced technology, such as a new mobile app and quote-to-issue technology. These developments reflect a continued focus on growth and innovation in the insurance sector.

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