5 Reasons Why JMP Securities Is Bullish On EverQuote

EverQuote EVER, a free website for comparing quotes on auto insurance, listed on the Nasdaq June 28. JMP Securities is taking a bullish stance on the stock and outlined five key investment themes.

The Analyst

Analyst Ronald Josey initiated coverage of EverQuote with a Market Outperform rating and $25 price target.

The Thesis

Despite the fact that insurance quotes and sales are increasingly transitioning online, the sector remains underpenetrated in digital advertising and accounts for about 2 percent of ad budgets, Josey said in the initiation note. (See the analyst's track record here.)

The company can deliver "highly targeted referrals" for its core auto, home and life products for insurance partners, the analyst said. With providers increasing their ad budget for the platform, Josey said he expects incremental upside stemming from new category launches.

EverQuote's total near term addressable market is $2.6 billion in online ad spending from the non-health insurance industry, according to JMP. 

"Longer-term, we believe EverQuote's TAM is the $120 billion spent toward distribution, commissions totaling $112 billion and advertising spend."

Josey named five investment themes for the stock: 

Among the five key investment themes identified by JMP are:

• EverQuote is No. 7 among the top insurance sites, with 5.1 million unique visitors and 6.9 million total visits in June, according to comScore.
• Eighty-five percent of the company's revenue is from direct insurance partners. 
• Home and life, launched in 2016, contributed about 12 percent of revenue in the first quarter.  
• EverQuote is likely to launch two new verticals over the next several quarters. 
• The company's marketing efficiency is expected to improve as it scales. 

The Price Action

EverQuote shares were sliding 4.4 percent to $17.08 at the time of publication Monday afternoon. 

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