Craig-Hallum analyst has increased the price target for EverQuote (NASDAQ: NASDAQ:EVER) to $33.00, up from the previous $30.00, while maintaining a Buy rating for the stock.
The adjustment comes as auto insurance carriers show a growing interest in market opportunities following two years of price hikes. EverQuote has experienced significant fundamental improvements as a result, with more carriers increasing their spending and more states reaching rate adequacy, as per analyst from Craig.
The analyst notes that with rate adequacy now prevalent in most states, EverQuote is benefiting from the subsequent increase in carrier spending.
The forecast is positive, with expectations of additional carriers expanding their budgets in the second half of 2024, more states achieving rate adequacy in the first half of 2025, and captive agents beginning to invest throughout 2025.
Despite facing a more competitive market that could lead to higher media costs and pressure on variable marketing margin (VMM), EverQuote is expected to maintain strong performance in EBITDA and free cash flow (FCF).
EverQuote has seen a surge in growth, driven by a robust recovery in the auto insurance sector. The company's second-quarter revenue exceeded its guidance by approximately 14%, and third-quarter revenue guidance was about 42% higher than the prior consensus estimate, according to B.Riley.
EverQuote's strong performance also resulted in significant operating leverage, reporting record numbers for adjusted EBITDA, net income, and free cash flow in the second quarter.
InvestingPro Insights
As EverQuote (NASDAQ: EVER) navigates a dynamic auto insurance market, real-time data from InvestingPro provides a glimpse into the company's financial health and market performance. With a market capitalization of $832.02 million, EverQuote's impressive gross profit margin stands at 93.36% for the last twelve months as of Q2 2024, highlighting its ability to maintain profitability despite market pressures. Analysts have recognized the company's strong return, with a 254.96% one-year price total return, reflecting investor confidence and market momentum.
InvestingPro Tips indicate that EverQuote holds more cash than debt on its balance sheet, suggesting a solid financial position to weather market fluctuations. Additionally, with analysts predicting profitability this year, the company's strategic moves and operational efficiency are likely to bear fruit. There are 11 more InvestingPro Tips available, offering a deeper dive into EverQuote's financial nuances and investment potential.
While the company does not pay a dividend, suggesting a focus on reinvesting earnings for growth, the adjusted P/E ratio of -31.26 signals that the market expects future earnings to turn positive. The substantial price uptick over the last six months, with an 80.29% return, aligns with the analyst's optimism and the company's strategic outlook. As EverQuote approaches its next earnings date on November 4, 2024, investors and analysts alike will be watching closely to see if these positive trends continue.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.