Yes, Industry Experieces Auto Insurance Slump But This Analyst Is Upbeat on EverQuote's Prospects

Needham analyst Mayank Tandon maintained EverQuote Inc EVER with a Buy and raised the price target from $8 to $10.

EVER reported 3Q23 revenue of $55 million, above Tandon's $52.2 million estimate and the $52.3 million consensus. Revenue declined 46.7% Y/Y due to weakness in auto insurance revenue (down 51.1% Y/Y). 

EVER provided a soft 4Q outlook, which assumes ongoing weakness in the insurance advertising market.

EVER's 3Q results came in above expectations on all fronts, though expectations were low heading into the quarter as auto carrier advertising budgets remain depressed. 

While budgets are likely to remain pressured in 4Q based on the guidance, Tandon is encouraged by management's steps to drive efficiencies and reduce costs to protect margins and cash flow. Management also relayed expectations for a gradual recovery in insurance advertising budgets in FY24, noting that 8-9 of its ten largest clients have expressed growth plans. 

While the recovery could be choppy, expectations for improved growth and profitability keep the analyst constructive on the shares. 

The re-rating reflects Tandon's increased confidence in a healthier insurance advertising market in FY24.

The analyst projects Q4 revenue and EPS loss of $49.45 million (consensus $48.59 million) and $(0.16) (consensus loss $(0.36)).

Price Action: EVER shares traded higher by 16.20% at $8.65 on the last check Tuesday.