Verisk stock retains Outperform rating on growth projections

Tuesday, RBC Capital Markets has maintained its Outperform rating on shares of Verisk Analytics (NASDAQ:VRSK) with a steady price target of $300.00.

RBC Capital's analyst projects that the company will present its fiscal year 2025 guidance in line with its previously stated mid-term outlook. This outlook includes expectations of a 6-8% revenue increase, margin growth of 25-75 basis points, and a double-digit rise in earnings per share (EPS), which aligns with current estimates.

The company's track record supports these projections, with InvestingPro data showing impressive gross profit margins of 68.24% and consistent revenue growth of 7.16% over the last twelve months.

Verisk Analytics is anticipated to experience strong subscription growth in 2025. This growth is expected to be driven by various factors, including forms, rules, loss costs, anti-fraud analytics, and pricing tailwinds. The firm is also likely to benefit from a robust insurance market alongside revamped sales incentives that are set to enhance cross-selling opportunities.

The company's transaction growth is predicted to gain from an uptick in Auto insurance marketing efforts. While this is a positive sign, RBC Capital remains cautious, keeping an eye on several challenging comparatives from the previous year. These include heightened levels of Auto insurance shopping, significant issuance of CAT bonds, and the effects of hurricanes Helene and Milton in the fourth quarter of 2024.

Moreover, there is a watchful eye on how the shift from transaction revenues to subscription models will play out.

Verisk Analytics has positioned itself to tap into the opportunities presented by a healthy insurance market. The company's strategic focus on subscription services is expected to provide a steady revenue stream, bolstered by its efforts to improve cross-selling through changes in sales incentives.

As the market landscape evolves, Verisk's approach to expanding its subscription base and transaction growth remains a focal point for analysts and investors alike. For deeper insights into Verisk's valuation and growth metrics, investors can access the comprehensive Pro Research Report available on InvestingPro, which includes detailed analysis of the company's financial health score of GOOD (2.69) and its relatively low price volatility characteristics.

In other recent news, Verisk Analytics has been making waves with its strong financial performance and upgraded targets. The data analytics firm's recent earnings report revealed an adjusted earnings per share that exceeded market expectations, mainly due to improved profit margins. The company has also seen accelerated growth in subscription revenue, although transaction revenues have declined due to an ongoing shift to a subscription model.

BMO Capital Markets has responded to these developments by increasing its price target for Verisk to $276, maintaining a Market Perform rating on the stock. This revised target reflects confidence in the company's continued momentum and the robustness of its subscription-based offerings.

Verisk reported a robust third-quarter financial performance for 2024, with a 7% increase in consolidated revenue, reaching $725 million. The company's subscription-based revenue streams showed substantial growth, contributing to a rise in income from continuing operations to $220 million and a 19.4% increase in diluted GAAP earnings per share to $1.54.

Looking ahead, Verisk forecasts 2024 consolidated revenue between $2.84 billion and $2.9 billion, with adjusted EBITDA expected to be between $1.54 billion and $1.6 billion. Despite potential headwinds in 2025, Verisk remains optimistic due to its subscription momentum and premium growth. The company is also exploring further inorganic growth opportunities in international markets, as discussed by CEO Lee Shavel.

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