Goosehead Insurance Is An Industry Disruptor, William Blair Says In Bullish Initiation

Goosehead Insurance Inc GSHD is leveraging new technology and a unique organizational structure to gain market share in the typically slow-growth insurance space, according to William Blair.

The Analyst

William Blair’s Adam Klauber initiated coverage of newly public Goosehead Insurance with an Outperform rating.

The Thesis

Goosehead brokers personal line insurance, a massive — but fragmented — market. A large number of small agencies are captive to just one carrier, Klauber said in a note.

"Goosehead breaks the mold with its business model, which leverages new age technology to sell a variety of personal insurance products offered by dozens of carriers," the analyst said. 

The company sells insurance products from over 80 carriers though franchisees and its own agents. By leveraging technology to provide shared servicing and back-office functionalities, its brokers are able to focus more on growing their books, Klauber said. 

Goosehead's sales grew by 40 percent last year, and Klauber thinks it can continue at this rate for several years to come.

The insurance company utilizes partner channels, particularly in the real estate and mortgage spaces, to draw referrals at no cost.

“The stock is an attractive opportunity to invest in a high-growth technology-enabled distributor,” Klauber said. 

Price Action

Goosehead Insurance shares opened 1 percent higher on Thursday and was trading up 0.67 percent at the time of publication. The stock fell with the rest of the market on the news that President Donald Trump cancelled the highly anticipated summit with North Korea.

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