Bank of America Securities analyst Joshua Shanker maintained a Sell rating on GooseHead Insurance (GSHD – Research Report) today and set a price target of $42.00.
Joshua Shanker’s rating is based on the observed trend of GooseHead Insurance underperforming in key growth metrics and an anticipated failure to meet revenue projections. Shanker notes that the company’s controlled premium growth has already fallen below its long-term target, despite significant increases in personal lines insurance pricing. He anticipates that GooseHead will not meet its revenue guidance for 2024, given challenges in recruiting open franchisees and converting new franchisees into strong producers. Furthermore, with the deceleration of personal lines pricing, 2024 is expected to present tougher comparisons to 2023, potentially exacerbating revenue shortfalls.
Additionally, Shanker suggests that perceived agent productivity gains may be temporary, as they seem to result more from a reduced agent count rather than actual improvements in new business production among existing agents. Consequentially, revenue trends are not showing signs of improvement. Moreover, Shanker argues that cash flow and EBITDA figures are overstated due to significant share-based compensation, and despite revenue growth, free cash flow as a percentage of revenue is declining. With a price objective of $42 based on a discounted cash flow analysis, which indicates substantial downside risk compared to the current market price, Shanker maintains an Underperform rating for GooseHead Insurance’s stock.
Shanker covers the Financial sector, focusing on stocks such as Progressive, American International Group, and Axis Capital. According to TipRanks, Shanker has an average return of 8.2% and a 60.12% success rate on recommended stocks.
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GooseHead Insurance (GSHD) Company Description:
Goosehead Insurance, Inc. is a holding company, which engages in the provision of independent personal lines insurance agency. It operates through Corporate Channel, and Franchise Channel segments. The Corporate Channel segment consists of company-owned and financed operations with employees who are hired, trained and managed by the company. The Franchise Channel segment focuses in franchisee operations that are owned and managed by Franchisees. The company was founded by Robyn Jones and Mark E. Jones in 2003 and is headquartered in Westlake, TX.
Read More on GSHD:
- Goosehead Insurance price target lowered to $85 from $89 at Piper Sandler
- Goosehead Insurance Announces Executive Leadership Shift
- Goosehead CEO Mark Jones to transition to chairman, Mark Miller to succeed
- Goosehead Insurance, Inc. Announces Fourth Quarter and Full Year 2023 Results
- Goosehead Insurance Announces CEO Transition
