EverQuote (EVER) and RxSight (RXST) Deliver; FTAI Infrastructure (FIP) Still a Buy
EverQuote (EVER)
Shares of EverQuote (EVER) have been way up and are now up just slightly this morning after the company blew past Q2 expectations. Revenue of $117 million grew 72% and beat by $14 million (14%) while EPS of $0.32 improved from a loss of -$0.18 in Q2 of last year and beat by $0.12.
Management also increased Q3 guidance significantly, from a range of $100 - $105 million to $137 - $143 million. This has analysts cranking up full-year revenue estimates, with consensus now at $465 million versus $385 million going into the event. Clearly, that 21% increase in revenue expectations means price targets should go up, and they are. Most new targets are landing somewhere in the mid-30 range (EVER traded as high as 27.5 last week).
As far as details from the conference call, management no longer expects any decline in auto revenue this year given improved carrier underwriting profitability, which has carriers continuing to ramp up spend. There are a few meaningful states that have yet to get rate approvals that could provide a tailwind into 2025 (if approved), including New York and California. Management sees some potential for M&A.
On the headwind side, new regulatory changes set to go into effect in January 2025 will make it more challenging to reach consumers through outbound calls. When implemented, this means that when a customer submits a quote request on EverQuote’s website, the company can only sell the lead to one agency unless the customer opts in to receive multiple bids. The company currently only sells one or two leads, so this shouldn’t be a dramatic change, but it is still a change. This will affect the 25% to 30% of the business where local agents reach out to leads. It could drive lower lead volumes but should also drive higher quality leads and therefore lead to higher prices paid per lead from these customers. Some uncertainty, and EverQuote is investing in the back-end tools to prepare for the change.
EVER remains at hold half, and we’ll see how the stock handles this quarter and the current market volatility. EverQuote is like a leveraged bet on insurance sales, and things can ramp up super quickly, but also go soft pretty quickly too. HOLD HALF
RxSight (RXST)
RxSight (RXST) stock is soaring this morning (+20%) after a big beat and raise Q1. Revenue grew 68% to $35 million, beating by 8%, while adjusted EPS of $0.00 improved from a loss of $0.28 in Q2 last year and beat by $0.09. Full-year revenue guidance was increased by $5 million (twice the amount of the Q2 beat), from $132 - $137 million to $139 - $140 million.
Growth in the quarter was driven by higher volume, placements, and utilization, which is exactly what we want to see. On the conference call, management said patient demand for cataract surgeries and custom procedures remains high, despite a wonky economy, though there is some pressure from reduced healthcare reimbursements.
This quarter’s performance should be enough to wipe away concerns that RxSight was losing momentum (it clearly is not), and the stock’s early morning rally shows the extent of the surprise. The question now is whether or not RXST stock can carry this momentum forward and begin to perform as I had expected when we got into the stock in March. I’ll keep at buy, with the caveat being that my rating could change if momentum fades. BUY
FTAI Infrastructure (FIP)
Lastly, shares of my most recent addition, FTAI Infrastructure (FIP), sold off Friday and Monday with the broad market. There is nothing “wrong” with the company or stock, this is just a reflection of the volatility in the broad market. FIP is still a buy, and I suggest averaging in on this pullback. BUY
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