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Goosehead Insurance Faces Challenges in Launching New Franchises, Analysts Say

By Don Francis, Editor
April 3, 2024 8:04 AM UTC
Goosehead Insurance Faces Challenges in Launching New Franchises, Analysts Say

BMO Capital's Michael Zaremski lowered their price target on Goosehead Insurance (NASDAQ: GSHD) by 5.3% from $95 to $90 on 2024/03/28. The analyst maintained their Buy rating on the stock.

According to Zaremski, the stock's recent decline can be attributed to the company's Q4 and FY 2023 earnings report, which revealed a drop in revenues over the past few quarters while expenses remained steady. In response, Goosehead Insurance has initiated workforce streamlining measures to improve efficiency.

Zooming out, Zaremski highlighted a broader trend of declining profit margins among home and auto insurers in recent years. This has resulted in reduced motivation for carriers to take on new business, making it more challenging for Goosehead Insurance to launch new franchises.

In addition to Zaremski's analysis, other analysts have also weighed in on GSHD's performance. Piper Sandler's Paul Newsome raised their price target by 3.5% from $85 to $88, maintaining their Strong Buy rating on the stock. On the other hand, Truist Securities's Mark Hughes lowered their price target by -6.7% from $75 to $70, while maintaining their Hold rating.

Among the top-rated analysts, 75% currently rate GSHD as a Strong Buy or Buy, while 25% see it as a Hold. No analysts are recommending or strongly recommending selling the stock.

Looking ahead, analysts forecast that GSHD will deliver earnings per share (EPS) of $0.78 in the upcoming year. If these predictions prove accurate, the company's next yearly EPS will see a year-over-year increase of 32.4%.

Despite the recent decline in stock price, GSHD has shown resilience over the past year. Since the last quarterly report on December 31, 2023, the stock price is down 12.5%, but it has still achieved a year-over-year increase of 28%. Notably, GSHD has outperformed the S&P 500, which has seen a 26.2% increase during the same period.

It is worth noting that BMO Capital analyst Michael Zaremski has an impressive track record, ranking in the top 23% of Wall Street analysts according to WallStreetZen. Zaremski specializes in the Financial Services and Communication Services sectors and boasts an average return of 4.8% and a win rate of 59.2%.

Goosehead Insurance, Inc. operates as a holding company for Goosehead Financial, LLC, providing personal lines insurance agency services across the United States. The company operates through two segments, Corporate Channel and Franchise Channel. It offers various insurance products and services, including homeowner's insurance, automotive insurance, dwelling property insurance, flood insurance, wind insurance, earthquake insurance, excess liability or umbrella insurance, motorcycle insurance, recreational vehicle insurance, general liability insurance, property insurance, and life insurance. As of December 31, 2021, the company had a total of 2,151 franchises. Goosehead Insurance, Inc. was founded in 2003 and is headquartered in Westlake, Texas.

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