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On Tuesday, Keefe, Bruyette & Woods demonstrated a positive outlook on Root, Inc. (NASDAQ:ROOT) by increasing their price target on the company’s shares to $150.00, up from the previous target of $90.00. The firm has sustained an Outperform rating on the stock.
The adjustment in Root’s price target comes ahead of the company’s first-quarter earnings report. Keefe, Bruyette & Woods sees Root as their top pick within the insurtech sector, citing several reasons for their optimistic stance. The analysts believe there is a significant potential for the company to exceed consensus estimates. They project earnings to be $4 per share above the consensus in aggregate for the years 2025 to 2027.
The firm also points to possible growth in policies in force (PIF) as a positive factor. This potential growth is attributed to Root’s embedded partnerships with companies like Carvana (NYSE:CVNA) and others. The analyst’s note highlighted Root’s competitive position, which is bolstered by its agility due to its size and technology, especially in the face of tariff uncertainty. It was mentioned that Root currently holds approximately 415,000 policies across roughly 35 states. With revenue growth of 159% in the last twelve months, InvestingPro analysis suggests the company is currently trading above its Fair Value.
Keefe, Bruyette & Woods have revised their estimates for Root upwards and have introduced their 2027 earnings estimate at nearly $5 per share. This upward revision has led to the new price target of $150, which reflects a substantial increase from the previous target.
The analyst’s commentary underscores the reasons for the firm’s positive stance on Root. "We took our ROOT estimates up, are introducing ’27E at nearly $5/sh, and are raising our target to $150 (from $90)," stated the analyst from Keefe, Bruyette & Woods, indicating a strong belief in the company’s future performance and growth prospects.
In other recent news, Roots (TSX:ROOT) Inc. reported its financial results for the fourth quarter of 2024, showing a 2.4% increase in total sales to $110.8 million year-over-year. The company’s adjusted EBITDA rose by 9.1%, reaching $25.3 million, while the gross margin improved by 270 basis points to 61.3%. Additionally, Roots successfully reduced its net debt by 56.7% to $7.3 million. Despite these positive financial outcomes, the market reaction was muted, reflecting broader investor caution. The company announced plans to continue investing in marketing and digital innovation, with expectations of growth in its activewear and core fleece collections. Roots also intends to commence a share repurchase program for up to 1.3 million shares, reflecting confidence in its long-term growth potential. The company remains optimistic about its future, anticipating steady revenue growth and significant improvements in earnings per share by fiscal year 2026.
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