AI fears have hit this data stock. Investor Sarat Sethi sees a buying opportunity
Verisk Analytics is a leading data and software provider to the insurance industry, with hard-to-replicate data and a recurring revenue model that make its business difficult to disrupt.
TL;DR
- Verisk Analytics is a leading provider of data analytics and software to the insurance industry, focusing on underwriting and claims.
- The company possesses proprietary data and software that are difficult for competitors to replicate.
- Over 80% of Verisk's revenue is recurring, with client retention above 95% and EBITDA margins exceeding 50%.
- Recent growth slowdown and concerns about AI disruption have pushed the stock to a discount.
- The company has shed non-insurance businesses and is now focused on its core insurance market under CEO Lee Shavel.
- Verisk's historical revenue growth has been around 8% annually, slowing to 5-6% recently.
- Despite AI risks, over 90% of Verisk's revenue comes from unique data and intellectual property, and they are developing AI tools.
- The stock is down significantly, making its valuation more attractive, trading at approximately 15 times forward EV/EBITDA, down from historical 20-25 times.