Tuesday 4th of January 2022 09:15:59 AM

SelectQuote stock drops 8% after Evercore downgrades on expected soft growth

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  • SelectQuote (NYSE:SLQT) stock dips 8.1% after Evercore ISI analyst Elizabeth Anderson downgrades the direct-to-consumer insurance services platform to In Line from Outperform as annual enrollment period ("AEP") volumes look "less robust vs. peers and valuation looks limited in CY1H'22."
  • Trims price target to $11 from $18.
  • Evercore ISI's web tracker sees softer Y/Y growth, especially vs. its peers, in AEP volumes. The company's annual revenue is dominated by CYQ4 results. "The trend is not encouraging and is likely impacted by a combination of a tougher labor environment (as noted by management) as well as new CMS-mandated marketing protocols which hamper agent productivity," Anderson writes in a note to clients.
  • Sees upside to current valuation levels as likely more limited "until the company has regained a more consistent track record for quarterly prints," the analyst said, adding that that's not likely until FY2023/H2 CY2022.
  • Note that in early December, Seeking Alpha's Quant rating flagged SelectQuote (SLQT) as a high risk for underperforming on decelerating momentum and negative EPS revisions.
  • Quant rating stands at Very Bearish, while the average Wall Street rating is Bullish (2 Very Bullish, 3 Bullish, 2 Neutral). SA Authors' average rating is also Bullish (3 Bullish, 1 Neutral).
  • SA contributor Donovan Jones takes a more optimistic on SelectQuote's (SLQT) preparation efforts for Q4, which includes Medicare Advantage enrollments.


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