EverQuote, Inc.

EVER Details

EverQuote, Inc. (NASDAQ: EVER) operates as a US-based online marketplace that connectsbuyers of insurance products to a network of insurance providers to obtain a relevant quotation for auto, home, and life insurance products. It generates revenue through sales of consumer referrals to insurance carriers and agents, and indirect distributors. It derives the majority of its revenue from direct channels. As of November 01, 2021, the company's market capitalization stood at USD 416.95 million.

Q3FY21 Results:

• Growth in Revenue: The company reported a 19.54% rise in revenues to USD 107.56 million during Q3FY21 (ended September 30, 2021), compared to USD 89.98 million during Q3FY20, attributable to YoY growth of 19.91% in the Automotive vertical.
• Surge in Net Losses: Its net loss in Q3FY21 increased to USD 5.27 million from USD 3.18 million reported in Q3FY20.
• Cash and Debt Position: As of September 30, 2021, EVER had cash and cash equivalents of USD 41.77 million and no outstanding debt.

Key Risks:

• Insurance Carrier Concentration Risk: A limited number of insurance carriers are affiliated with the bulk of EVER's insurance businesses. As a result, any termination or modification of these insurance carriers' contractual arrangements could be detrimental to the company's operations.

Outlook:

• Q4FY21 Estimate: EVER expects to generate revenue in the range of USD 93.5 – 98.5 million in Q4FY21, with an adjusted EBITDA of USD (1.5) – 1.5 million.
• FY21 Guidance: The estimated range for FY21 revenue is USD 410 – 415 million, representing a 19% YoY increase at the mid-level. It also estimates its adjusted EBITDA to range between USD 12.5 – 15.5 million, representing a YoY decline of 24% at the mid-level.

Valuation Methodology: Price/Cash Flow Based Relative Valuation

(Analysis by Kalkine Group)

• % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

EVER Daily Technical Chart (Source: REFINITIV)

Stock Recommendation:

EVER's stock price has decreased 52.14% in the past three months and is currently leaning towards the lower end of its 52-week range of USD 13.71 to USD 54.96. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is at 29.57. We have valued the stock using the Price/Cash Flow-based relative valuation methodology and arrived at a target price of USD 13.52.

Considering the significant correction in the stock price, declining FY21 EBITDA estimates, current valuation, and associated risks, we recommend a " Sell " rating on the stock at the closing price of USD 14.34, up 3.99% as of November 01, 2021.

* The reference data in this report has been partly sourced from REFINITIV.

*All forecasted figures and industry information have been taken from REFINITIV.