Evercore ISI has maintained its In-Line rating and $279.00 price target on Verisk Analytics (NASDAQ: NASDAQ:VRSK), following an adjustment to the company's third-quarter organic constant currency (OCC) growth estimate.
The revision reflects a slight decrease to +6.9% from the previously projected +7.1%. This change is due to a correction in the analysis of insurance-linked securities (ILS) issuance volumes, which now indicates a headwind to OCC growth in the third quarter of 2024 compared to the second quarter.
The analyst noted that while ILS issuance growth slowed to +4% year-over-year in the third quarter from +20% in the prior quarter, it is traditionally a period of lower ILS activity. The revised estimate is significantly lower than the previously expected +29% growth.
Despite this, the expectation of additional storm-related revenues could partially offset the impact of reduced ILS volumes. Property and casualty insurers have reported higher than anticipated natural catastrophe losses in the third quarter, which may contribute to storm revenue for Verisk.
Insurers like Travelers Companies, Inc. (NYSE:TRV), Progressive Corp (NYSE:PGR), and Allstate Corp (NYSE:ALL) have reported varying degrees of natural catastrophe losses. TRV's losses were up by +10% year-over-year in the third quarter, while ALL and PGR reported increases of +44% and +56%, respectively, compared to declines in the second quarter.
Despite the lower transactional growth estimate, Verisk is still expected to outperform consensus OCC growth estimates for the third quarter, with a projection of 6.9% versus the consensus of 6.3%. Furthermore, the firm's earnings per share (EPS) estimate has been slightly reduced by one cent to $1.64, remaining above the consensus estimate of $1.60.
The analyst concluded that Verisk's stock performance, which has lagged behind its peers and the S&P following the second-quarter results, could see an uptick as the company's OCC growth accelerates, offering a potentially positive outlook ahead of the third-quarter 2024 results.
In other recent news, Verisk Analytics, a leading data analytics provider, has been in the spotlight with several significant developments. RBC Capital Markets raised its price target for Verisk from $268 to $300, maintaining an Outperform rating based on anticipated growth trends. This optimism stems from factors such as robust subscription growth and potential sustained pricing tailwinds in 2025. Verisk's Q2 2024 results showed a year-over-year revenue increase of 6.2% to $717 million, primarily driven by an 8.3% increase in subscription revenue. The company also initiated a $150 million accelerated share repurchase program.
Verisk's Extreme Event Solutions group estimated that insured losses from Hurricane Helene in the U.S. will range between $6 billion and $11 billion. In addition, the company expanded its digital trading platform, Whitespace, to the U.S. market, aiming to streamline the placement of (re)insurance business.
Verisk's financial performance and market outlook have been closely followed by several analyst firms, including Evercore ISI, Baird, Deutsche Bank (ETR:DBKGn), BMO Capital Markets, and Jefferies, leading to various updates on their ratings and price targets for the company.
InvestingPro Insights
To complement the analysis of Verisk Analytics' (NASDAQ:VRSK) performance and outlook, InvestingPro data provides additional context. As of the last twelve months ending Q2 2024, Verisk reported a revenue of $2.78 billion, with a solid revenue growth of 8.12%. This growth aligns with the analyst's expectations of outperforming consensus OCC growth estimates.
InvestingPro Tips highlight Verisk's impressive gross profit margins, which is reflected in the data showing a gross profit margin of 67.91% for the same period. This robust profitability supports the company's ability to weather fluctuations in transactional volumes, such as the slowdown in ILS issuance growth noted in the article.
Another relevant InvestingPro Tip indicates that Verisk has raised its dividend for 5 consecutive years, demonstrating financial stability despite market challenges. The company's dividend yield stands at 0.58%, with a significant dividend growth of 14.71% in the last twelve months.
For investors seeking a more comprehensive analysis, InvestingPro offers 7 additional tips that could provide deeper insights into Verisk's financial health and market position.
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