JPMorgan Upgrades Frontdoor Inc. (FTDR) to Overweight 'on Improving Core Biz Execution + Frontdoor Brand Optionality'

JPMorgan analyst Cory Carpenter upgraded Frontdoor Inc. (NASDAQ: FTDR) from Neutral to Overweight with a price target of $38.00 (from $30.00).

The analyst comments "Frontdoor reported a 1Q beat across revenue/Adj. EBITDA, guided 2Q ahead of the Street, and reiterated its 2023 outlook. We have been cautious on FTDR shares since our downgrade in 2021, when at the time home service plans faced headwinds from claims inflation and a challenging real estate market, and FTDR’s new on-demand offering (ProConnect) was not gaining traction. A lot has changed since then. The new mgmt team under CEO Bill Cobb has stabilized the cost structure and improved execution, claims inflation has moved past its peak with margins recovering faster than expected (& room to run), and the new Frontdoor brand offering is off to a promising start with 165k+ app downloads in the first three weeks. Importantly, we think there are multiple potential positive catalysts still ahead, including the launch of Frontdoor Premium in June, an eventual turn in the real estate channel, and upside to what we think is a conservative 2023 outlook. While still early, we like the Frontdoor brand vision (see our detailed thoughts here), and in our view any potential Frontdoor brand success represents upside optionality to FTDR shares trading at 10x EBITDA. We have long thought FTDR was well positioned to expand into home services adjacencies given its nationwide network of ~15k service pros, and while prior efforts proved challenging, we have more confidence in the current mgmt team, product offering anchored on a differentiated video chat service, and marketing strategy (look out for Frontdoor branded Amazon boxes on your doorstep!). We are upgrading FTDR to Overweight and increasing our Dec-23 price target to $38 based on 12.5x our 2024E Adj. EBITDA of $263M."

For an analyst ratings summary and ratings history on Frontdoor Inc. click here. For more ratings news on Frontdoor Inc. click here.

Shares of Frontdoor Inc. closed at $26.67 yesterday.

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