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On Wednesday, Morgan Stanley (NYSE:MS)’s analysts made adjustments to their outlook on Verisk Analytics (NASDAQ:VRSK), increasing the price target to $305 from the previous $300 while maintaining an Equalweight rating on the stock. With a current market capitalization of $40.7 billion and trading near its 52-week high of $300.50, InvestingPro analysis suggests the stock is currently trading above its Fair Value. The firm’s commentary highlighted that Verisk delivered a quarter that met expectations, with a notable subscription growth. The company reported an 8.6% organic growth for the quarter, which was slightly ahead of Morgan Stanley’s and consensus estimates.
Verisk’s adjusted EBITDA margin matched what analysts had anticipated, as did the adjusted earnings per share (EPS), which came in 4 cents below Morgan Stanley’s estimate but 1 cent above the consensus. The standout performance was seen in subscription organic revenue growth, which surged by 11% during the quarter. The company maintains impressive gross profit margins of 68.2%, according to InvestingPro data, reflecting strong operational efficiency. This growth was attributed to robust pricing strategies, the ongoing conversion of transaction-based customers to subscriptions, and new customer acquisitions in the Extreme Event segment.
However, transactional revenue saw a 1.1% decline, primarily due to the shift from transactional to subscription revenue models, normalized attrition rates, and partially offset by increased storm activity. Pricing is expected to remain supported throughout 2023 due to the hard market conditions and intentional price increases that are driven by the value provided.
Looking ahead to 2025, Verisk’s guidance was generally consistent with expectations regarding revenue and adjusted EBITDA, falling just 1% short of both Morgan Stanley’s and consensus projections. Nevertheless, lower-than-anticipated line items such as interest expense and depreciation and amortization led to a forecast for adjusted EPS that was 6% below Morgan Stanley’s estimate and 5% below consensus. The guidance anticipates approximately 7% organic growth, around 70 basis points of margin expansion, and an adjusted EPS of $6.95. InvestingPro analysis shows the company maintains a strong financial health score of 2.89 (rated as GOOD), with 13 additional exclusive ProTips available to subscribers through the comprehensive Pro Research Report.
In other recent news, Verisk Analytics Inc . reported its fourth-quarter 2024 earnings, showing a slight revenue beat and a minor miss on earnings per share (EPS). The company posted an EPS of $1.61, just below the $1.60 forecast, while revenue reached $736 million, surpassing the expected $733.53 million. Despite the revenue growth of 8.6% year-over-year, Verisk’s stock experienced a decline, reflecting investor concerns about future growth prospects. Subscription revenues saw an 11% increase, contributing to an adjusted EBITDA margin improvement to 54.1%. The company also achieved a record free cash flow of $920 million for the full year. Looking ahead, Verisk projects consolidated revenue between $3,030 million and $3,080 million for 2025, with an expected EPS range of $6.80 to $7.10. Analysts from firms like Morgan Stanley and Goldman Sachs have shown interest in Verisk’s pricing strategies and the impact of recent storm activities on transactional revenues.
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