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On Friday, Keefe, Bruyette & Woods, an investment firm, increased their price target for Porch Group Inc. (NASDAQ:PRCH) shares to $6.00, up from the previous target of $3.50. The firm has kept its Market Perform rating on the stock.
Analysts at Keefe, Bruyette & Woods have adjusted their valuation of Porch Group following the company’s fourth-quarter earnings report. The earnings before interest, taxes, depreciation, and amortization (AEBITDA) of $42 million surpassed both the firm’s and the consensus estimate of $33 million, despite Porch Group reporting revenue that fell short of expectations.
Porch Group has updated its financial outlook, raising its guidance for the year 2025 and reaffirming its targets for 2026 and beyond. This positive adjustment comes after the company completed a reciprocal exchange transaction, which is expected to steer Porch Group back towards growth. Analysts have revised their estimates to reflect the new reciprocal exchange structure and the management’s updated guidance and targets.
The revised price target of $6.00, up from $3.50, is based on a multiple of 14 times the projected 2026 earnings before interest, taxes, depreciation, and amortization (EBITDA). The analysts noted that Porch Group’s unique structure, diverse business mix, and high leverage contribute to the complexity of its valuation. They have also expressed their view that Porch Group’s insurance segment should be valued at a discount until it demonstrates scalability independently and the company can deconsolidate the business with a recapitalization.
While maintaining the Market Perform rating, the analysts remarked that they would not be surprised if Porch Group’s stock price retracts some of its gains, which they presume might have been driven by short covering. This caution aligns with InvestingPro analysis, which indicates the stock’s RSI suggests overbought conditions, and the company’s short-term obligations currently exceed its liquid assets. Discover more insights and make informed investment decisions with InvestingPro’s comprehensive research reports, available for over 1,400 US stocks.
In other recent news, Porch Group Inc. reported its fourth-quarter earnings for the fiscal year 2024, revealing revenue of $100.4 million, which was below the forecasted $110.26 million. Despite this revenue miss, the company achieved a robust adjusted EBITDA of $41.8 million for the quarter, marking a significant increase from the prior year. The company’s full-year revenue for 2024 was $437.8 million, a modest 2% increase over the previous year. Analysts at Benchmark and Loop Capital have shown optimism about Porch Group’s future, with Benchmark raising the stock’s target price to $10 and Loop Capital upgrading the stock rating from "Hold" to "Buy." Porch Group’s management has expressed confidence in maintaining an 80% gross margin, with plans to improve the EBITDA margin by over 1000 basis points in 2025. The company is focusing on strategic initiatives, including restructuring its insurance business into a Reciprocal Exchange model, which is expected to mitigate financial risk and enhance profit margins. Porch Group has set its 2025 revenue guidance between $390 million and $410 million and aims for $500 million in gross written premium. The company is also targeting a $100 million adjusted EBITDA for 2026, with an emphasis on expanding its presence in the homeowners insurance market.
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