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On Thursday, Piper Sandler adjusted its outlook on Trupanion, Inc. (NASDAQ:TRUP), reducing the price target to $52 from the previous $57, while maintaining an Overweight rating on the company’s shares. The adjustment places the target within the broader analyst range of $41-$65 for the $2 billion market cap pet insurer. The decision came after Trupanion reported a mix of achievements and challenges in its recent earnings release.
Trupanion achieved a 70% loss ratio and a 15.3% adjusted operating margin for its subscription business in the fourth quarter of 2024, surpassing its targeted levels. The company maintained strong liquidity with a current ratio of 1.71, and InvestingPro analysis shows revenue growth of 16% over the last twelve months. However, the company experienced a slowdown in growth, and the 2025 guidance indicated that recent rate increases have led to slower-than-expected revenue growth due to a reduced pace in the growth of subscription enrolled pets.
Despite the slowdown, enrollment numbers continued to rise, and the company posted its best quarterly retention result since the second quarter of 2023, with a slight 4 basis point decrease in 12-month retention quarter over quarter. The earnings report also included Trupanion writing off approximately $5.3 million in goodwill connected to a couple of acquisitions in continental Europe, specifically Smart Paws and PetExpert.
Following the earnings call, Trupanion’s shares indicated a lower trading level, reflecting the mixed results and cautious outlook presented. Despite the recent dip, the stock has delivered an impressive 95% return over the past year. According to InvestingPro Fair Value analysis, the stock appears slightly undervalued at current levels. The company’s performance and future expectations are being closely monitored by investors as Trupanion continues to navigate the pet insurance market.
In other recent news, Trupanion Inc . announced its fourth-quarter 2024 earnings, highlighting a slight miss on earnings per share (EPS) but a marginal beat on revenue expectations. The company reported an EPS of $0.04, which fell short of the analyst forecast of $0.07, while revenue reached $337.3 million, slightly surpassing the projected $335.46 million. Despite the revenue increase, the EPS miss contributed to a 6.48% decline in after-hours stock trading. Subscription revenue showed a significant year-over-year growth of 19%, amounting to $227.8 million. Analysts from firms like William Blair and Stifel have expressed a focus on the company’s growth strategies, noting the importance of pet acquisition investment and pricing normalization. Trupanion’s management has outlined plans for 2025, projecting revenue between $1.379 billion and $1.414 billion, with a focus on expanding subscription revenue by 14%. The company also addressed a goodwill write-down related to its European market operations, which reflects strategic adjustments in their international expansion efforts.
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