Tuesday 8th of February 2022 04:30:22 AM

SelectQuote stock tanks after fiscal Q2 miss, guidance cut; Citi downgrades

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  • SelectQuote (NYSE:SLQT) stock plunges 51% in premarket trading after the online insurance brokerage's fiscal Q2 earnings missed consensus by a wide margin and expects 2022 results to fall well short of consensus.
  • Citi analyst Daniel Grosslight downgrades the stock to Neutral/High Risk from Buy/High Risk and slashes his price target to $4 from $14.
  • The reasons behind the Q4 miss weren't surprising, Grosslight said in a note to clients, pointing to hiring delays, CMS marketing review, less shopping amid greater plan parity, and lower persistency. "What was surprising with the quantum of the miss and the $145M of negative tail adjustment revenue the company took this quarter (vs $65M expected in FQ4)," he said.
  • In addition, the company cut guidance, "titrating growth down," and said it's focusing more on cash flow and predictability.
  • Note that in December, SA Quant rating warned that SelectQuote (SLQT) was at high risk of performing poorly, on decelerating momentum and negative EPS revisions.


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