On Friday, BofA Securities adjusted its outlook on Goosehead Insurance Inc . (NASDAQ: NASDAQ:GSHD), reducing the price target from $44.00 to $39.00 while retaining an Underperform rating on the company's shares.
The revision followed Goosehead Insurance's announcement that it would issue a special dividend to its shareholders of record as of January 21, with the payment date set for January 31. According to InvestingPro data, GSHD trades at a P/E ratio of 127x and has seen an impressive 82% price return over the past six months, despite current analyst targets ranging from $44 to $145.
The insurance firm plans to fund this dividend through a combination of debt instruments, specifically a $300 million term loan accompanied by a $75 million credit facility. This move mirrors the company's strategy during the third quarter of 2021 when it also paid a special dividend financed by debt. The new term loan will carry an interest rate based on SOFR plus an additional 3.50%.
InvestingPro analysis shows the company maintains healthy liquidity with a current ratio of 1.55, suggesting adequate capacity to manage its debt obligations. Get access to over 30 key financial metrics and a comprehensive Pro Research Report for deeper insights into GSHD's financial health.
As part of its financial maneuvering, Goosehead Insurance also intends to use the debt to pay off an existing $93 million loan. The analyst from BofA Securities noted that the increased interest expense due to the new term loan is expected to cause a significant decrease in the company's earnings per share (EPS) forecast.
In other recent news, Goosehead Insurance Inc. has experienced significant developments. The company reported a milestone in its recent earnings call, marking a tenfold increase in quarterly premiums to $1 billion since its IPO in 2018. Total (EPA:TTEF) written premiums and revenues also saw growth of 28% and 10% respectively, reaching $78 million. Based on this performance, Goosehead Insurance has revised its 2024 guidance for total written premiums to between $3.7 billion and $3.82 billion, and total revenues to between $295 million and $310 million.
Analyst firms Piper Sandler, BMO Capital, and RBC Capital have all adjusted their outlooks on Goosehead Insurance, raising their price targets and expressing confidence in the company's growth trajectory and financial health. Piper Sandler increased the price target to $132.00, BMO Capital to $120, and RBC Capital to $109.
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