Company Reports

We keep our $225 per share fair value estimate for wide-moat Verisk Analytics following a strong start to fiscal 2024, which met our top-line expectations but fell marginally short of our profitability forecasts. Verisk shares rallied after results as earnings surpassed consensus estimates, boosted by a relatively lower tax burden and lower average share count after an accelerated share repurchase program. Nevertheless, Verisk continues to screen as fairly valued relative to our unchanged valuation.

Wide-moat Verisk Analytics reported reasonable fourth-quarter and full-year fiscal 2023 results, which marginally surpassed our top-line forecasts but fell short of our above-guidance margin expectations. Amid industry profitability woes in 2023, Verisk enjoyed steady demand for most solutions, reflecting the mission-critical nature of the firm’s data and analytics tools, which allow insurers to achieve optimal underwriting and claims outcomes and improve internal efficiencies amid hefty insurance losses.

Verisk Analytics is the data and analytics backbone of the U.S. property and casualty insurance industry. The firm leverages a vast contributory database and industry relationships dating to its origin as an insurance provider consortium to derive analytical solutions that improve underwriting and claims outcomes, and operating efficiency. Alongside a contributory database with over 32 billion standardized records of insurance transactions, Verisk has established a proprietary database of P&C risks facing over 16 million commercial properties, environmental hazards facing every postal address in the U.S., and is a leader in catastrophe modelling used by insurers, financial institutions, and governments.

We maintain our $220 fair value estimate for wide-moat Verisk Analytics following healthy third-quarter 2023 results that track our full-year top-line growth and profitability expectations. The U.S. P&C insurance industry is facing profitability pressure amid inflation headwinds and higher insurance losses, however, demand for most of Verisk’s solutions remains robust. We believe this reflects the mission-critical and defensive nature of Verisk’s data and analytics capabilities that are integral for optimal underwriting and claim assessment outcomes. As insurers look to improve internal efficiencies and offset hefty insurance losses, we view Verisk as well placed to benefit from accelerated digitization tailwinds. At current prices, Verisk shares trade in line with our unchanged fair value estimate.

Verisk Analytics is the data and analytics backbone of the U.S. property and casualty insurance industry. The firm leverages a vast contributory database and industry relationships dating to its origin as an insurance provider consortium to derive analytical solutions that improve underwriting and claims outcomes, and operating efficiency. Alongside a contributory database with over 32 billion standardized records of insurance transactions, Verisk has established a proprietary database of P&C risks facing over 16 million commercial properties, environmental hazards facing every postal address in the U.S., and is a leader in catastrophe modelling used by insurers, financial institutions, and governments.

We are launching coverage of Verisk Analytics with a $220 fair value estimate and wide moat and Medium Uncertainty ratings. Verisk is the leading provider of data and analytics tools for the U.S. property and casualty insurance industry, supporting customers to better assess and price risk, achieve operating efficiencies, and optimize claim settlement processes. The firm’s solutions and wide economic moat are derived from a vast contributory database and proprietary data assets backed by regulatory-mandated disclosures and deep industry relationships traced to Verisk’s origin as an insurance provider consortium.

We are no longer providing equity research on Verisk Analytics. We provide broad coverage of more than 1,700 companies across more than 140 industries and adjust our coverage as necessary based on client demand and investor interest.

Led by a strong performance from its Decision Analytics business, Verisk Analytics VRSK reported solid first-quarter results, with revenue up 16.4% to $403.3 million and EBITDA up 12.6% to $179.7 million. Acquisitions played a large part in the company’s performance during the quarter as organic revenue growth came-in at 6.8%. Decision Analytics’ revenue increased 24.4% year over year to $250.7 million and now accounts for 62% of the company's total business, up 4 percentage points compared with last year. Given the limited growth opportunities in its Risk Assessment business, we think management's strategy to focus on fast growing Decision Analytics should handsomely repay it in the long run. Growth in Decision Analytics is driven by continued momentum in health-care and insurance solutions, partly offset by weakness in financial services (mortgage in particular) business. Health care remains a bright spot for the company, and we think MediConnect and the unified health-care technology platform should help Verisk further penetrate the health-care analytics market. The outlook for mortgage products continues to remain negative, but we think the firm should be able to absorb it, as mortgage makes up less than 10% of the total business. Despite solid top-line numbers, Decision Analytics saw 200 basis points of compression (39.3% to 37.3%) in margin during the quarter. This was due to continued investments made by the company to strengthen its products in the health-care vertical. Verisk’s health-care product portfolio is still growing, which will likely keep margins under pressure in the near-term.

Verisk is one of the insurance industry's leading risk specialists. Its comprehensive solutions enhance its clients' ability to manage insurance programs and claims processing. The company has an attractive business model with high revenue visibility, significant barriers to entry, high switching costs, and a scalable operating model. These factors have helped the company create a wide economic moat around its operations, in our view.

Verisk Analytics VRSK closed its fiscal 2012 on a strong note with revenue and EBITDA increasing by 15.2% and 17.4%, respectively. The company’s top- and bottom-line performance exceeded our expectations by a good margin. We are placing our fair value estimate under review as we revisit growth and margin assumptions for the company.

Verisk is one of the insurance industry's leading risk specialists. Its comprehensive solutions enhance its clients' ability to manage insurance programs and claims processing. The company has an attractive business model with high revenue visibility, significant barriers to entry, high switching costs, and a scalable operating model. These factors have helped the company create a wide economic moat around its operations, in our view.

Aided by a strong performance from its health-care vertical, Verisk VRSK reported solid third-quarter results. The company's revenue rose 17.3% year over year to $399 million while EBITDA grew 21.1% to $183 million. Importantly, the company's organic growth rate came in at 8.5%, up from 6.4% in the last quarter and 7.6% the year before. With demand for analytics growing rapidly in health-care vertical, we think Verisk is in a sweet spot. The company decision analytics also benefited from a steady performance from the insurance vertical, whose revenue grew 8.3% compared with last year. Mortgage and financial services continues to be a laggard but we expect Verisk to absorb it as revenue contribution from this line of business declines. Revenue from risk assessment business increased 2.8% year over year to $144 million. Benefiting from inherent operating leverage in the business, Verisk reported 150 basis points of expansion in EBITDA margin to 45.9%. The company's results exceeded our expectations in recent quarters and we plan to reassess long-term growth and margin assumptions. There's a strong possibility that we will be raising our fair value estimate. Management rescheduled the conference call to discuss third-quarter results to Nov. 2, and we plan to provide another update after the call.

Led by a strong performance from its decision analytics business, Verisk Analytics VRSK reported solid first-quarter results with revenue up 10.7% to $347 million and EBITDA up 14.5% to $159 million. Decision analytics revenue increased 17% year over year to $202 million and now accounts for 59% of the company's total business, up 4 percentage points compared to last year. Given the limited growth opportunities in its risk assessment business (40% of total revenue), we think management's strategy to focus more on fast growing decision analytics should handsomely repay it in the long run. Revenue growth in decision analytics is driven by continued momentum in its health care and insurance solutions, partly offset by weakness in its mortgage business. Health care remains a bright spot for the company and we think the recent MediConnect acquisition and unified health care technology platform should help Verisk further penetrate the health care analytics market. The outlook for mortgage products continues to remain negative, but we think Verisk should be able to absorb it, as the company derives less than 10% of its revenue from its mortgage business.

Verisk Analytics VRSK will report fourth-quarter and full-year results in a few weeks, and we expect the company to be on track to meet our growth and profitability expectations. Given its mature subscription-based business model, we expect to see another steady performance from the company's risk-assessment business, which accounts for about 40% of total revenue. This segment has historically grown in the mid-single digits, and we don't expect the trend to change anytime soon. The decision analytics segment, which makes up the rest of Verisk's business, holds the key to the company's future growth prospects. Verisk has relied on acquisitions in the past to expand its reach in this space, and we believe acquisitions will continue to play a major role in the future. Excluding acquisitions-related growth, we expect decision analytics revenue to grow in the low-double to high-single digits in the future.

Verisk is one of the insurance industry's leading risk specialists. Its comprehensive solutions enhance its clients' ability to manage insurance programs and claims processing. The company has an attractive business model with high revenue visibility, significant barriers to entry, high switching costs, and a scalable operating model. These factors have helped the company create a wide economic moat around its operations, in our view.