Wolfe Research on Verisk Analytics (VRSK): 'we believe the company could be aggressive with its buyback over the near-term'

Wolfe Research analyst Scott Wurtzel reiterated an Outperform rating and $245.00 price target on Verisk Analytics (NASDAQ: VRSK).

The analyst comments "This morning, VRSK announced that it had ended its effort to acquire AccuLynx. The company had announced the $2.35bn acquisition in July. VRSK had initially expected the deal to close in 2H25; however, it received a second request for information from the FTC in October. The FTC had not completed its review of the transaction by the 12/26 termination date, causing VRSK to terminate the acquisition agreement. The company also announced that it would redeem the $1.5bn in senior notes it had issued to help fund the acquisition. Shares are up 1-2% in early trading as of the time of writing. ● Investor reaction to the deal was mixed when it was announced, and we believe most may see the termination of the deal as a partial clearing event. Some saw the potential for AccuLynx to accelerate OCC revenue growth in the out-years given its LDD growth profile and viewed it as a complementary solution to VRSK's property estimating solutions business, with cross-sell potential to VRSK's PES clients and data monetization opportunities with carriers. However, others were skeptical given it was VRSK's first large-scale deal since simplifying the business a few years ago and also came at a time when OCC revenue growth was decelerating from higher levels seen in a hard pricing market. Management also reiterated its confidence to deliver results inline with its long-term growth targets (6-8% OCC revenue growth and doubledigit EPS growth) for this year, 2026, and beyond. ● Financial Implications: When VRSK announced the AccuLynx acquisition on 2Q25 earnings, it had included revenue contribution from the deal in its 2025 guidance. However, following the second request from the FTC, the company removed AccuLynx contribution from its 2025 outlook, so we do not see risk to 2025 reported results from the acquisition being terminated. We believe 2026 Street revenue estimates will likely have to come down as contribution from AccuLynx is taken out of numbers; however, we believe we could see upward revisions to EPS as VRSK announced it will redeem the $1.5bn in debt that was issued to fund the acquisition. We believe the redemption of the notes can help reduce annualized interest expense by ~40% relative to what was implied for 4Q by the company's guidance (back to mid-high $30mn range per quarter vs. low $60mn implied by 4Q guidance). VRSK had expected the deal to be accretive to adjusted EPS by YE26, but we believe there likely would have been initial dilution from the elevated interest expense. Further, VRSK can return to focusing its capital allocation strategy on share repurchases, with the company having $1.2bn in buyback capacity as of the end of 3Q25. With shares trading ~7x below its median 5-year NTM P/E multiple, we believe the company could be aggressive with its buyback over the near-term (subject to normal blackout periods)."

For an analyst ratings summary and ratings history on Verisk Analytics click here. For more ratings news on Verisk Analytics click here.

Shares of Verisk Analytics closed at $220.34 yesterday.

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