Shares in pet insurance provider Trupanion (TRUP) are rising 5% in Wednesday’s pre-market trading after the company reported a clean beat-and-raise quarter.
Specifically, Q2 GAAP EPS of $0.04 beat Street estimates by $0.06 while revenue of $117.9M beat by $3.2M- and represented a 27.9% year-over-year increase. Subscription business revenue was $92.5M (beating the consensus of $92.1M), up 19% from the same period last year.
TRUP also reported total enrolled pets of 744,727 at June 30, 2020, up 29% year-over-year, with Pet Acquisition Cost (PAC) down 7% year-over-year to $199 as Net Additions accelerated to 28% (vs. 0.5% in Q1). Meanwhile Q2 Monthly Retention Rate came in at 98.66%, an all-time-high, driven by Trupanion Express and improved customer service.
“Across key financial and operational metrics, it was a very strong quarter for Trupanion,” said Darryl Rawlings, CEO of Trupanion. “I’m particularly proud of our service levels we provided to our members, which contributed to records in monthly average retention and the number of pet owners adding pets or referring friends to Trupanion in the quarter.”
For the full year, management raised Revenue guidance to $487-$491M (vs. $471-$478M prior) and Adj Operating Income guidance to $56M (vs. $55M prior).
Following the report RBC Capital’s Shweta Khajuria reiterated her buy rating on the stock with a $62 price target up from $51 previously. Despite shares climbing over 40% year-to-date, the new price target indicates further upside potential lies ahead.
“TRUP reported clean Beat and Raise Q2 results with All Time High (ATH) Retention Rates and accelerating Net Subscription Pet Additions (highest growth since Q3:18)” cheered the analyst, in a report titled ‘Purring Like A Kitten.’ (See TRUP stock analysis on TipRanks)
According to Khajuria, TRUP offers a highly predictable subscription- based business model, strong value proposition, with leading industry position in a very large, under penetrated market. “We believe TRUP should be able to grow sustainably, in the low-to-mid-20% range for the next several years” she concludes.
Overall, the stock scores a bullish Strong Buy Street consensus with 4 recent buy ratings vs just 1 hold rating.
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