Porch Lifts 2021 Sales Outlook; Stock Leaps 11.4%


Porch Group stock jumped 11.4% in Thursday’s extended market trading after the software company raised its 2021 revenue outlook, following the announcement of four acquisitions.

Porch (PRCH) announced the purchase of home insurer Homeowners of America (HOA) and its related subsidiaries, and marketing and data platform V12 for a combined deal value of $122 million. In addition, Porch announced two smaller acquisitions, PalmTech and iRoofing, for the company to make a foray into new home service categories.

The HOA deal, which is likely to close in the second quarter of 2021, will help Porch to become one of the largest InsurTech companies delivering long-term growth. Further, the V12 acquisition is in-line with Porch’s strategy of “going deeper in mover marketing,” the company said. Notably, the acquisitions will strengthen its vertical software platform for home service companies and homeowners.

As a result of these acquisitions, Porch raised its revenue outlook for 2021 from $120 million to $170 million, representing a 134% year-over-year growth. Analysts had been looking for $119.97 million. (See PRCH stock analysis on TipRanks).

Meanwhile, Porch also announced its 4Q and 2020 preliminary results. The company is scheduled to report its 4Q results in March. Porch said that it expects 2020 revenue to be slightly better than $72 million. The company forecasts net loss in the range of $53 million to $55 million and adjusted EBITDA loss in the range of $18 million to $19 million for 2020.

Earlier on Dec. 29, Benchmark Co. analyst Daniel Kurnos maintained a Buy rating and a price target of $24 (50.6% upside potential) on the stock. In a note to investors, Kurnos said that the company has a “software plus transaction revenue model in the home services space,” and is poised to benefit from the rapidly growing home services software market.

Overall, the rest of the Street is cautiously optimistic on the stock with the Moderate Buy analyst consensus. The average analyst price target of $20.50 implies upside potential of about 28.7% to current levels. Shares have gained about 6% since the company listed on NASDAQ on Dec. 24, 2020.

What’s more, the TipRanks’ stock investors tool shows that investors currently have a Positive stance on PRCH.

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