On Thursday, BMO Capital Markets adjusted its price target for Goosehead Insurance Inc. (NASDAQ: GSHD), reducing it to $90 from the previous $95. Despite this change, the firm continues to hold an Outperform rating on the insurance company's stock.
The price target revision comes after Goosehead Insurance reported its fourth-quarter earnings for 2023 two months earlier, which led to a significant 39% drop in the company's share price. This decline contrasted with a much smaller 6% decrease in the 2024 consensus earnings per share (EPS) estimates.
BMO Capital's own EPS estimates at that time only saw a decrease of 4%, but the firm has now decided to lower its forecast for the company's full-year 2024 EBITDA by an additional 4%.
The decrease in the EBITDA forecast is expected to be more pronounced in the first quarter, with a sharper recovery anticipated in the second half of the year. BMO Capital's first-quarter 2024 and full-year 2024 EBITDA estimates are now 19% below and 4% above the consensus, respectively.
The analyst from BMO Capital provided a statement explaining the rationale behind the revised estimates, noting the disparity between the company's share performance and the changes in EPS estimates.
The statement highlighted the specific adjustments to the EBITDA forecasts and the anticipated recovery in the latter half of the year. The new price target of $90 reflects these updated expectations.
InvestingPro Insights
As investors digest the revised price target for Goosehead Insurance Inc. (NASDAQ: GSHD) from BMO Capital Markets, a look at the latest data from InvestingPro reveals a nuanced picture of the company's financial health and market valuation. Despite the recent drop in share price, Goosehead Insurance has a track record of raising its dividend for three consecutive years, indicating a commitment to returning value to shareholders. Moreover, analysts remain optimistic about the company's prospects, expecting net income growth this year.
The InvestingPro Data shows a market capitalization of $2.47 billion, with a high Price/Earnings (P/E) ratio of 106.26, reflecting a premium valuation by the market. The company's revenue growth over the last twelve months has been robust at 24.93%, demonstrating its ability to expand its top line. Additionally, Goosehead Insurance boasts a solid gross profit margin of 41.27%, underscoring its profitability at the core operational level.
For investors seeking more depth, there are additional InvestingPro Tips available, offering further insights into Goosehead's financials and market performance. These tips include observations on stock price movements, earnings multiples, and liquidity positions, which can help investors make more informed decisions. To access these insights and more, consider using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro. With the next earnings date on the horizon, staying informed with the latest data and expert analysis could be key to navigating the market's response to Goosehead Insurance's performance.
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