EverQuote shares price target raised on strong Q2 results

Tuesday, Needham raised its stock price target on EverQuote (NASDAQ:EVER) shares to $38 from $30, maintaining a Buy rating. The adjustment follows EverQuote's second-quarter results, which surpassed expectations in terms of revenue and earnings. The online insurance marketplace's performance benefited from increased spending on customer acquisition as insurance premiums rose and competition for new customers intensified.

EverQuote reported a significant year-over-year revenue increase, with guidance suggesting approximately 155% growth at the midpoint for the third quarter. This outlook has bolstered confidence in the company's continued strong spending patterns. Moreover, EverQuote has seen an improvement in cash flow, indicating a focus on efficient growth.

Despite a more than 15% rally in after-hours trading, EverQuote's shares are anticipated to open at an enterprise value to EBITDA (EV/EBITDA) multiple of around 16 times the firm's fiscal year 2025 estimate. This valuation is considered attractive by Needham.

The firm's positive stance on EverQuote is supported by expectations of further upward revisions to estimates. The company is also seen to benefit from secular growth tailwinds and the potential for significant margin expansion, which could lead to a higher re-rating of the shares.

In other recent news, EverQuote has been the focus of several positive developments. The company has seen its stock price target raised by both Craig-Hallum and Canaccord Genuity, with an increase from $26.00 to $30.00 and $25 to $30 respectively, as the firms maintain a Buy rating on the stock. These revisions follow strong first-quarter results that exceeded expectations, including record net income, adjusted EBITDA, and operating cash flow.

Canaccord Genuity attributes this performance to a sustained recovery in auto insurance spending, with EverQuote's revenue reaching its highest point since the same quarter last year. Meanwhile, Craig-Hallum noted EverQuote's strong start to the year, driven by increased performance marketing investment by auto carriers, and anticipates sustained growth in upcoming quarters.

Furthermore, EverQuote's first-quarter performance has led to a significant upward revision for its second-quarter outlook. The company is now expected to achieve record revenue and has already secured record EBITDA. Investments in the platform are projected to enhance variable marketing margin (VMM) and profit margins.

In light of these developments, EverQuote is well-positioned for the future. The company has generated $11 million in cash during the quarter, closing the period with $49 million in cash reserves. As the company continues to capitalize on these trends, the outlook remains positive for EverQuote.

InvestingPro Insights

Following Needham's optimistic re-rating of EverQuote, real-time data from InvestingPro provides a detailed financial snapshot of the company's current standing. With a market capitalization of $832.02 million, EverQuote's financial health appears robust, as indicated by a gross profit margin of an impressive 91.95% in the last twelve months as of Q1 2024. This high margin underscores the company's ability to manage costs effectively and maintain profitability despite market fluctuations.

InvestingPro Tips highlight that EverQuote holds more cash than debt on its balance sheet, which is a strong indicator of financial stability. Analysts also predict that the company will be profitable this year, which aligns with the positive outlook presented in the article.

Moreover, the company's shares have seen a large price uptick of 80.29% over the last six months, reflecting investor confidence and market momentum. For readers interested in a deeper analysis, there are 11 additional InvestingPro Tips available that provide further insights into EverQuote's financial performance and projections.

While EverQuote is currently trading at a high Price/Book multiple of 9.42, the potential for profitability and continued sales growth may justify this valuation in the eyes of some investors. The company's significant year-over-year revenue increase and strong guidance for the third quarter, as mentioned in the article, are in line with these InvestingPro data points and tips.

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