On Tuesday, Evercore ISI resumed coverage on Verisk Analytics (NASDAQ:VRSK), a data analytics provider, with an In Line rating and set a new price target of $279.00. The firm highlighted the company's strong financial performance, particularly its high margins, which are approximately 54-55%, with even higher incremental margins.
The firm's evaluation suggests that organic constant currency (OCC) growth is a key factor influencing Verisk's stock performance. This assessment was supported by the company's second-quarter results for 2024, which showed that despite exceeding expectations for earnings per share (EPS) and margins, the stock declined due to OCC growth of 6%. This was below the consensus forecast of 7% and Evercore ISI's own estimate of 7.2%.
Evercore ISI acknowledged the market's recognition of Verisk's robust business model, as reflected in the company's valuation. The firm's familiarity with the property and casualty (P&C) insurance industry provides a unique insight into Verisk's business dynamics.
The coverage assumption by Evercore ISI comes after a detailed examination of Verisk's business and market position. The firm's In Line rating indicates that the analyst believes the stock is fairly valued at its current level, considering the company's financials and growth prospects.
The new price target of $279.00 is reflective of Evercore ISI's expectations for Verisk's future performance, based on the company's recent financial results and market position. Verisk Analytics has not publicly responded to the coverage assumption and price target set by Evercore ISI.
In other recent news, Verisk Analytics has experienced significant developments in its financial performance and market outlook. The data analytics provider recently reported a year-over-year revenue increase of 6.2% to $717 million in its Q2 2024 results, primarily driven by an 8.3% increase in subscription revenue. However, transaction revenues saw a 3% decline.
Financial services firm Baird reaffirmed its positive stance on Verisk, maintaining an Outperform rating and a price target of $285.00, highlighting the company's robust growth prospects. Meanwhile, Deutsche Bank (ETR:DBKGn) maintained a Hold rating on Verisk shares with a price target of $282.00, expressing confidence in the company's growth and margin targets. BMO Capital Markets adjusted its price target for Verisk from $278 to $263, while Jefferies reduced its stock price target to $256, maintaining a Hold rating.
Analysts from Jefferies have revised their adjusted earnings per share estimate for 2024 downwards to $6.57 due to the company's growth being affected by transaction revenues. Despite the mixed financial results, Verisk Analytics confirmed its guidance for the year 2024, suggesting that the company plans to increase its investments and hiring in the latter half of the year.
In addition, Verisk has initiated a $150 million accelerated share repurchase program, reflecting its commitment to returning capital to shareholders.
InvestingPro Insights
To complement Evercore ISI's analysis, InvestingPro data offers additional insights into Verisk Analytics' financial health and market position. The company's market capitalization stands at $38.22 billion, underlining its significant presence in the data analytics sector. Verisk's revenue for the last twelve months as of Q2 2024 was $2.78 billion, with a solid revenue growth of 8.12% over the same period.
InvestingPro Tips highlight Verisk's impressive gross profit margins, which align with Evercore ISI's observations about the company's high margins. Additionally, Verisk has raised its dividend for 5 consecutive years, demonstrating a commitment to shareholder returns. This is further supported by a dividend growth of 14.71% in the last twelve months.
While Evercore ISI rates Verisk as In Line, it's worth noting that the stock is trading at a high P/E ratio of 43.49, which could indicate market confidence in the company's future prospects. However, another InvestingPro Tip suggests that Verisk is trading at a low P/E ratio relative to near-term earnings growth, with a PEG ratio of 0.49 for the last twelve months as of Q2 2024.
For investors seeking a more comprehensive analysis, InvestingPro offers 7 additional tips that could provide valuable insights into Verisk's investment potential.
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