Analysts Mostly Bullish On Newly Public Insurance Firm BRP Group

Several analysts started coverage of public insurance distribution firm BRP Group Inc. (NASDAQ: BRP) bullish, citing strong revenue growth and expectations of beneficial consolidation.

Benzinga · 11/18/2019 17:23

Several analysts started coverage of public insurance distribution firm BRP Group Inc. (NASDAQ: BRP) bullish, citing strong revenue growth and expectations of beneficial consolidation.

The Analysts

Bank of America’s Jay Cohen initiated coverage with a Buy rating and $20 price target.

Wells Fargo's Elyse Greenspan started BRP with an Outperform rating and $20 price target.

JP Morgan's Pablo Singzon starts out Neutral on BRP, with a $19 target price.

Raymond James analyst C. Gregory Peters initiated coverage with an Outperform rating and $19 price target.

Jefferies analyst Daniel Fannon initiated coverage with a Hold rating and $18 price target.

Keefe, Bruyette & Woods analyst Christopher Campbell started coverage with an Outperform rating and $22 price target.

See Also: BRP Group IPO: What You Need To Know

The Theses

Though a few started out on the sidelines, organic revenue growth potential had several analysts recommending a Buy on the stock, which went public late last month. BRP provides personal and commercial insurance, employee benefits, risk management and Medicare consultation to 400,000 clients in several southern states.

Cohen said BRP could grow in the 13-14% range over the next several years, well above what industry peers are doing, citing its competitive advantages against smaller competitors without some of the same service ability.

"Also, we believe BRP’s relatively small size and geographic footprint, leaves a significant amount of room for growth," Cohen wrote in a note.

Making Deals

BRP also is looking to grow through acquisition, several analysts said. Greenspan noted the company intends to acquire enough businesses to become a top 10 insurance broker by revenue over the next decade.

"We see BRP as being successful on both its organic growth and deal targets as the company has 37,000 brokers in the U.S. alone and has recently raised equity capital to help finance these deals," Greenspan wrote.

Peters said the revenue growth also will benefit from favorable personal and commercial lines pricing, which has been rising for more than two years. Peters also cited BRP's risk mapping process, sheltered distribution relationships, and its "uniquely integrated MGA platform that accesses the renters' insurance marketplace with limited acquisition costs," as strengths.

The sidelined analysts agreed on the growth potential, but Fannon sees the stock price as currently balanced and JP Morgan's Singzon said even with the growth opportunity, the "fundamentals need to catch up with the stock."

Price Action

BRP shares traded around $47.15 at time of publication.