Verisk Analytics’ Q2 Earnings Preview
Analysts at RBC Capital provided their outlook on Verisk Analytics, Inc. (NASDAQ:VRSK) ahead of the company’s upcoming Q2 earnings, which will be released on July 29.
The analysts expect Q2 revenues modestly below the Street estimates as the tailwinds from insurance premium growth and international travel are more than offset by a slowdown in workers comp, difficult comps from the Texas freeze, and Russia/Ukraine headwinds.
According to the analysts, Q2 margins will likely be impacted by the stranded costs along with similar margin headwinds in Q1, however, the analysts believe the financial divestiture should drive higher consolidated margins.
The analysts reduced their price target on the company’s shares to $210 from $227 but maintain the outperform rating as the defensive end-market and portfolio rationalization position the stock well in a choppy tape.
| Symbol | Price | %chg |
|---|---|---|
| 6532.T | 6186 | -1.16 |
| MEJA.JK | 444 | 0 |
| 4373.T | 2711 | 0.18 |
| 9757.T | 2205 | -0.82 |
What to Expect From Verisk Analytics’ Upcoming Q1/23 Earnings?
RBC Capital analysts provided their views on Verisk Analytics (NASDAQ:VRSK) ahead of the company’s upcoming Q1/23 earnings, scheduled to be reported on May 3.
The analysts expect organic growth to improve throughout fiscal 2023 as the headwinds in the auto underwriting and marketing moderate, workers' compensation improves, and robust pricing tailwinds above the premium growth.
According to the analysts, the recent investor day reinforced the results-driven culture under the new management team, focusing on growth while balancing investments.
The analysts conservatively estimate Q1/23 revenue of $629 million, slightly below the Street estimate of $633 million, as their Underwriting & Ratings revenues of $449 million are in line with the Street but their Claims revenue estimate of $180 million is modestly below the Street estimate of $183 million. The analysts expect Q1 EBITDA of $317 million and EPS of $1.15, below the Street estimate of $323 million and $1.19, due to higher stranded costs from the Energy divestiture.
Verisk Analytics’ Upcoming Investor Day Preview
RBC Capital analysts provided their views on Verisk Analytics, Inc. (NASDAQ:VRSK) upcoming Investor Day on March 14, noting that the company could tighten the 2024 margin targets of 53-56% to the high end. In addition, the company will likely provide color on lowering the capital intensity over the midterm. The Investor Day will focus on high-growth initiatives while balancing investment and margin.
The analysts believe the company should provide incremental disclosures to get investors comfortable with the sustainability of the revenue growth. In particular, revenue split up by high-growth businesses (namely Life, Marketing, Auto, International Specialty Insurance, Climate, and Cyber), core businesses (ISO, ClaimsSearch), and offerings growing in line with the company average (Xactware, AIR) will be helpful. Investors are looking for details on the company's plans to expand high-growth businesses as a percentage of overall revenues.
The company released its Q4 results earnings last week, with both EPS of $1.43 and revenue of $630.4 million coming in better than expected.
Verisk Analytics 2022 Preview
Analysts at RBC Capital provided a 2022 preview for Verisk Analytics, Inc. (NASDAQ:VRSK), stating that early indications of FY22 strong direct written premium growth suggest durable insurance tailwinds.
According to the analysts, energy revenue growth should improve in FY22 by lapping investment banking client headwinds and sustained momentum driven by stable oil prices.
The analysts expect flattish margins in FY22 as operating leverage is offset by higher T&E, hiring, and moderating Cloud headwinds. RBC Capital believes the company will likely divest the Financial Services business but retain the Energy business given the strategic fit and the potential dilution from the deal.
What to Expect From Verisk Analytics Q3 Results?
Analysts at RBC Capital increased their price target on Verisk Analytics, Inc. (NASDAQ:VRSK) to $235 from $203 ahead of Q3 earnings results.
According to the analysts, positive intra-quarter data points well for growth, where an above-average hurricane season bodes well for Claims activity and higher premium and quoting activity will likely provide a lift to the insurance underwriting business.
Moreover, broad-based improvement in the energy sector both in fundamentals and M&A activity should help WoodMac, as mentioned by the brokerage. It expects to see a gradual improvement in COVID-sensitive revenues (~15% of revenues).
Lastly, the analysts expect financial services to remain weak but to turn around in Q4 as contract headwinds anniversary. They expect broad-based momentum in the Insurance and Energy vertical to sustain going forward.
