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VRSK – Market expectations are for Uniform ROA to remain stable, but management may have concerns about revenues, software investments, and costs

July 9, 2021

  • Verisk Analytics, Inc. (VRSK:USA) currently trades above corporate averages relative to UAFRS-based (Uniform) earnings, with a 33.7x Uniform P/E. At these levels, the market is pricing in expectations for profitability to remain stable, but management may have concerns about COVID-sensitive revenues, software investment opportunities, and pandemic-driven cost benefits.
  • Specifically, may have concerns about the impact of contract transitions on revenue, declines in COVID-sensitive revenue, and the sustainability of returns on their investment portfolio. In addition, they may be concerned about the persistence of pandemic-driven cost benefits, the sustainability of Lens platform usage, and their software development investments. Furthermore, they may be overstating the potential of Lens Power and their Verisk Pay launch.