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Piper Sandler has adjusted the price target for Trupanion, Inc. (NASDAQ: NASDAQ:TRUP), a provider of medical insurance for cats and dogs, raising it to $45.00 from the previous $38.00.
The firm maintained a Neutral rating on the stock. The revision reflects a shift in valuation methodology due to the company's consistent operating free cash flow (FCF) over the past four quarters, ending in the second quarter of 2024, and the capital benefits arising from the pet insurance regulatory reclassification.
According to Piper Sandler, Trupanion's valuation now aligns more closely with traditional insurance distribution companies. This change is influenced by the company's financial performance and its recent investor day affirmations, including achieving a 15% subscription margin in the fourth quarter of 2024. The new price target is based on approximately 14.2 times the estimated 2025 earnings per share (EPS), which is around the average for distributor peers.
Trupanion's investor day also revealed the latest subscription enrollment numbers, totaling 1,029,219, a slight increase from 1,020,934 at the end of the second quarter of 2024. This growth rate was noted as more modest than expected, which Piper Sandler suggests could act as a potential negative catalyst for the company's earnings.
In other recent news, Trupanion Inc . has seen noteworthy developments. The company has reported a 16% year-over-year increase in Q2 revenue, hitting $314.8 million, with a significant contribution of $208.6 million from subscription revenue.
This growth has been achieved despite a 15% decrease in new pet acquisitions. Furthermore, Trupanion has updated its full-year revenue guidance to range between $1.263 billion and $1.279 billion, indicating confidence in continued growth.
On the personnel front, Trupanion appointed John Gallagher as its new Chief Operating Officer. Analyst firms, including Canaccord Genuity, Stifel, and BofA Securities, have provided updates on Trupanion. Canaccord Genuity maintained a Buy rating, while BofA Securities projected stronger margins by 2025 due to ongoing price increases. Stifel, while maintaining a Hold rating, raised its price target on Trupanion's stock.
In a separate development, a former executive of Chewy (NYSE:CHWY), Austin Kauh, has agreed to a settlement with the U.S. Securities and Exchange Commission (SEC), paying $35,275 to resolve charges of insider trading that occurred in 2021.
InvestingPro Insights
To complement Piper Sandler's analysis of Trupanion, Inc. (NASDAQ:TRUP), recent data from InvestingPro offers additional context. As of the last twelve months ending Q2 2024, Trupanion's revenue stood at $1.2 billion, with a notable growth rate of 19.47%. This aligns with the company's expanding subscription base mentioned in the article.
InvestingPro Tips highlight that Trupanion's net income is expected to grow this year, which could support the company's goal of achieving a 15% subscription margin by Q4 2024. However, it's worth noting that the company was not profitable over the last twelve months, with a gross profit margin of 19.8% that InvestingPro characterizes as weak.
The stock's recent performance has been strong, with InvestingPro data showing a 48.43% price return over the last three months and a 57.51% return over the past six months. This upward trend aligns with Piper Sandler's increased price target, although the stock's volatility, as noted by InvestingPro, suggests potential risks.
For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips for Trupanion, providing a deeper dive into the company's financial health and market position.
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