On Friday, B.Riley resumed coverage on EverQuote (NASDAQ:EVER) with a Buy rating, setting a price target of $24.00. The firm highlighted EverQuote's position as a leading online insurance marketplace, which connects insurance shoppers with carriers and agents.
The company has faced revenue volatility due to fluctuations in marketing budgets from auto insurance carriers, a consequence of persistent inflationary pressures and challenges in achieving profitability targets over the past two years.
The firm noted that EverQuote has taken significant steps to address these challenges, including a workforce reduction and the strategic exit from its healthcare insurance vertical in mid-2023. These actions were aimed at streamlining the company's cost structure and focusing on core competencies.
As inflationary pressures ease and more carriers are expected to hit profitability targets, B.Riley anticipates a resurgence in marketing spend for new customer acquisition in 2024.
The analyst's optimism for EverQuote's prospects in the coming years is based on the assumption that the company is well-positioned to benefit from an anticipated increase in carrier marketing expenditures. This is expected to drive revenue growth and adjusted EBITDA leverage in the fiscal years 2024 and 2025.
Despite a strong year-to-date share performance, which saw EverQuote's shares rise by 62% compared to a roughly 2.9% decline in the Russell 2000 Index, B.Riley believes that there is potential for further upside as the auto insurance sector's recovery gains traction.
The $24 price target from B.Riley is derived from a projected fiscal year 2025 enterprise value to adjusted EBITDA multiple of 25 times. This valuation reflects the firm's confidence in EverQuote's ability to capitalize on the improving market conditions and its streamlined operations. The analyst's Buy rating signals a positive outlook for the stock's performance in the near future.
InvestingPro Insights
InvestingPro data underscores the unique position of EverQuote (NASDAQ:EVER) within the online insurance marketplace. With a market capitalization of $620.24 million and an impressive gross profit margin of 92.2% for the last twelve months as of Q4 2023, the company demonstrates a strong ability to retain earnings from its revenues. This is particularly notable given the volatility in revenue, which saw a decrease of 28.75% in the same period. Despite this, EverQuote boasts a substantial price uptick with a 3-month price total return at 65.03% and an even more remarkable 6-month price total return at 140.64%.
InvestingPro Tips highlight that EverQuote holds more cash than debt on its balance sheet, which is a positive sign of financial health and may provide resilience in fluctuating market conditions. Additionally, analysts predict that the company will be profitable this year, aligning with the sentiments expressed by B.Riley regarding the company's favorable position as carrier marketing expenditures increase. The company's stock price, previously closing at $18.8, is trading at a high Price / Book multiple of 7.67, which suggests investor confidence in its asset value. For readers looking to delve deeper into EverQuote's financials and potential investment opportunities, InvestingPro offers additional tips and metrics. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
EverQuote's strategic adjustments and the positive outlook shared by analysts may indeed signal a turning point for the company as it navigates through the post-pandemic market landscape. With 12 additional InvestingPro Tips available, investors can gain a comprehensive understanding of EverQuote's financial health and make informed decisions.
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