On Wednesday, Truist Securities maintained a Hold rating on Goosehead Insurance Inc . (NASDAQ:GSHD), currently trading at $101.69, with a steady price target of $90.00. The stock has seen a significant 14.7% decline over the past week, despite maintaining a strong "GREAT" financial health score according to InvestingPro. The firm’s analysts projected a marginal slowdown in the company’s new sales growth for the first quarter, anticipating a 16% increase, which is slightly below the average analyst expectation of 20%. This figure encompasses both new business commissions by corporate agents and new business royalty fees.
The anticipated first-quarter sales growth represents a deceleration from the previous quarter’s performance. In the fourth quarter of 2024, Goosehead Insurance saw a 17% rise in new sales, narrowly missing the 18% growth forecasted by analysts. This was a notable improvement from the third quarter’s 10% growth rate. InvestingPro data shows the company achieved impressive revenue growth of 20.7% over the last twelve months, with analysts expecting continued profitability this year.
The expected slowdown in the current quarter is attributed to a deceleration in mortgage originations. According to projections from Fannie Mae (OTC:FNMA), mortgage originations are set to grow by 4% in the first quarter, a decrease from the 11% growth observed in the fourth quarter of 2024.
Truist Securities’ analysis indicates that while the setup for new sales growth in the first quarter appears to be marginally less favorable, the full-year outlook remains positive. The firm’s Hold rating suggests a cautious approach to the stock, with the $90.00 price target reflecting a consistent valuation perspective.
In other recent news, Goosehead Insurance has reported robust financial results, significantly exceeding market expectations. The company posted a fourth-quarter earnings per share (EPS) of $0.79, nearly doubling the anticipated $0.40, and achieved revenue of $93.9 million, surpassing the forecasted $78.61 million. This performance has led to increased price targets from analysts, with JMP Securities raising its target from $125 to $150 and Keefe, Bruyette & Woods (KBW) adjusting its target from $110 to $127, both maintaining an Outperform rating. Analysts attribute the earnings beat largely to better-than-expected contingent commissions and strong client retention.
Goosehead’s total written premiums for the full year increased by 29%, reaching $3.8 billion, while its net income more than doubled to $49.1 million. The company has set guidance for 2025, projecting total written premiums between $4.65 billion and $4.88 billion, indicating growth of 22% to 28%. Revenue for the year is expected to be between $350 million and $385 million, representing an 11% to 22% organic growth. Analysts from Citizens JMP have noted the company’s successful investments and repositioning efforts, which have led to enhanced productivity and improved product availability.
Moreover, Goosehead Insurance’s financial position remains strong, with cash and cash equivalents of $58.0 million as of the end of 2024. The company’s liquidity and capital resources are expected to support its growth trajectory following a special distribution and a one-time special cash dividend in January 2025. The company’s strategic initiatives, including expanding its franchise distribution and enhancing technology, are expected to continue driving growth in the coming years.
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