EU and US could reach trade deal this weekend - Reuters
On Wednesday, Barclays reaffirmed its Overweight rating on Verisk Analytics (NASDAQ:VRSK) with a steady price target of $310.00. The firm highlighted Verisk's accelerated subscription Organic Constant Currency (OCC) growth of +9.1%, which contributed to the company's earnings surpassing expectations. Despite an unchanged earnings guidance, Barclays anticipates Verisk to exceed the higher end of its forecast, with a modeled adjusted EPS of $6.64.
Verisk's shares saw an uptick of +3.8% compared to a roughly flat performance by the S&P 500 index, following the release of their solid third-quarter revenue results. The revenue showed a +6.8% increase in OCC, approximately $4 million above Barclays' estimates. However, the margin was slightly below expectations, with an adjusted EBITDA of $401 million and a 55.2% margin, roughly 30 basis points lower than projected.
The company outperformed Barclays' adjusted EPS estimates by $0.05, attributed to tax factors. Despite the unchanged guidance, which could be perceived negatively, Barclays believes investors have become accustomed to the conservative forecasts provided by Verisk's management, even late into the fiscal year.
Barclays further noted that Verisk's subscription OCC is benefiting from contract uplifts, which offer attractive long-term economics and consistency for investors. Looking ahead, the firm referenced SwissRe's updated forecasts, which now expect Net Written Premium (NWP) growth to be +9.5% for 2024, up from the previous +8%, and +4% for 2025. This follows a +10.4% NWP growth for 2023, which is anticipated to influence revenue positively through 2025. Barclays emphasized that strong pricing will continue to act as a tailwind for Verisk through at least 2026.
In other recent news, Verisk Analytics reported a year-over-year revenue increase of 6.2% to $717 million in Q2 2024, primarily driven by an 8.3% increase in subscription revenue. Evercore ISI maintained its In-Line rating on Verisk with a price target of $279, while RBC Capital Markets raised its price target from $268 to $300, maintaining an Outperform rating.
Verisk's Extreme Event Solutions group estimated insured losses from Hurricane Helene in the U.S. to range between $6 billion and $11 billion. The company also launched its digital trading platform, Whitespace, in the U.S. market. These are recent developments in Verisk's operations and financial performance.
InvestingPro Insights
To complement Barclays' positive outlook on Verisk Analytics (NASDAQ:VRSK), recent data from InvestingPro provides additional context to the company's financial performance and market position. Verisk's market capitalization stands at $39.09 billion, reflecting its significant presence in the analytics industry.
The company's impressive gross profit margin of 67.91% for the last twelve months as of Q2 2024 aligns with Barclays' observation of Verisk's strong performance. This high margin supports the company's ability to invest in growth initiatives like the Core Lines Reimagine project mentioned in the report.
InvestingPro Tips highlight that Verisk has raised its dividend for 5 consecutive years, with a current dividend yield of 0.59%. This consistent dividend growth, coupled with a 14.71% dividend increase in the last twelve months, underscores the company's financial health and commitment to shareholder returns.
Moreover, Verisk's revenue growth of 8.12% over the last twelve months supports Barclays' positive stance on the company's accelerated subscription growth. The PEG ratio of 0.49 suggests that the stock may be undervalued relative to its earnings growth potential, which could be attractive for investors considering Barclays' optimistic earnings forecast.
For readers interested in a more comprehensive analysis, InvestingPro offers 7 additional tips for Verisk Analytics, providing a deeper understanding of the company's financial position and market dynamics.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.