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On Monday, RBC Capital Markets adjusted its outlook on Verisk Analytics (NASDAQ:VRSK) shares, raising the price target to $314 from the previous $300, while maintaining an Outperform rating. The firm's analysts pointed to Verisk's ability to leverage market volatility and sustain strong revenue growth, particularly in its subscription services. According to InvestingPro data, Verisk commands a substantial market capitalization of $38.9 billion and currently trades at a premium valuation with a P/E ratio of 41.49.
The analysts at RBC Capital Markets expect high single to low double-digit subscription revenue growth in the first quarter of 2025. This forecast is supported by a record sales performance in 2024, effective pricing strategies, and a successful transition of transaction revenues to a subscription model. The company has demonstrated solid execution with revenue growth of 7.47% and impressive gross profit margins of 68.73% in the last twelve months. However, they also note the potential impact of more challenging comparisons and a moderation in price increases.
Verisk's anti-fraud and property estimating solutions are showing robust momentum, which is likely to benefit the Claims segment of the business. Meanwhile, the Underwriting segment is expected to gain from the strength in Forms, Rules, and Loss Costs, as well as from Extreme Events.
In addition to revenue growth, RBC Capital Markets anticipates that Verisk will achieve operating leverage, leading to an expansion of margins by over 75 basis points. The analysts underscore Verisk's position as the most defensive Information Services (NASDAQ:III) stock within their coverage universe, highlighting its capability to effectively navigate through periods of market volatility.
In other recent news, Verisk Analytics has seen several significant developments. RBC Capital Markets maintained an Outperform rating for Verisk, citing accelerated subscription growth of 11% year-over-year, driven by effective pricing strategies and customer acquisitions. Financial projections for fiscal year 2025 align with expectations, though increased expenses may impact earnings growth. BMO Capital Markets raised Verisk's stock target to $297, noting a slight beat on adjusted earnings per share for the fourth quarter and highlighting growth in the Underwriting and Claims segments. Despite lighter-than-anticipated guidance for 2025, Verisk's share buyback activity and increased dividends were positively received by investors. Morgan Stanley (NYSE:MS) also adjusted its outlook, increasing the price target to $305, acknowledging Verisk's 8.6% organic growth for the quarter. The shift from transactional to subscription revenue models was noted, with pricing expected to remain strong in 2023. In strategic partnerships, Verisk's CargoNet business teamed up with GearTrack to enhance cargo security, offering risk assessment tools and theft prevention strategies. Additionally, Verisk Marketing Solutions has partnered with Cygnus Marketing Communications to improve student recruitment processes for higher education institutions.
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