Verisk Analytics
VRSK
$193.72
+4.50%
Verisk Analytics is a leading data, analytics, and technology provider for the property-casualty insurance industry, offering underwriting, claims, and catastrophe modeling solutions. As a dominant player with deep roots in the insurance ecosystem, Verisk benefits from a strong regulatory moat and proprietary data sets that competitors cannot easily replicate. The current investor narrative centers on whether artificial intelligence will commoditize Verisk's data advantage, with the stock having fallen sharply amid these fears, while the company continues to generate strong cash flows and maintain high margins.…
VRSK
Verisk Analytics
$193.72
Investment Opinion: Should I buy VRSK Today?
Rating: Buy. Verisk's strong cash flows, high margins, and forward valuation discount to the industry make it an attractive investment for long-term investors willing to accept near-term volatility. The analyst consensus is bullish, with an average target price of approximately $264, implying 42% upside from the current price of $185.39.
Supporting Evidence: The forward P/E of 21.4x is below the software-services industry average of 25x, suggesting undervaluation. Revenue growth of 5.9% YoY, while modest, is steady, and operating margin of 44.6% is exceptional. Free cash flow of $1.19 billion provides a strong financial foundation. The analyst EPS estimates for the next fiscal year average $12.35, with a tight range ($12.22-$12.48), indicating high conviction. The implied target of $264 based on forward P/E offers significant upside.
Risks & Conditions: The biggest risks are AI disruption, margin compression, and revenue deceleration. This Buy rating would be downgraded to Hold if revenue growth falls below 4% or gross margins drop below 55%. It would be upgraded to Strong Buy if the stock pulls back to the 52-week low of $155.94 or if AI fears are alleviated by a strategic partnership. Overall, Verisk appears undervalued relative to its history and peers, offering a favorable risk/reward for patient investors.
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VRSK 12-Month Price Forecast
Verisk's current valuation offers a compelling entry point for a high-quality business with a durable moat. The forward P/E discount to the industry and the stock's historical range suggests the market is overly pessimistic about AI disruption. While revenue growth is modest, the company's cash flow generation and profitability provide a margin of safety. The key risk is whether AI will erode Verisk's competitive advantage, but the regulatory moat and proprietary data are strong barriers. I would upgrade to high confidence if the company reports accelerating revenue growth or announces a strategic AI initiative. Conversely, a downgrade to neutral would occur if margins continue to compress or if a major competitor enters the market.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Verisk Analytics's 12-month outlook, with a consensus price target around $251.84 and implied upside of +30.0% versus the current price.
Average Target
$251.84
5 analysts
Implied Upside
+30.0%
vs. current price
Analyst Count
5
covering this stock
Price Range
$155 - $252
Analyst target range
Verisk is covered by 5 analysts, with a consensus leaning bullish: ratings include Outperform, Strong Buy, Overweight, and In Line. The average analyst target price is not explicitly provided, but based on the estimated EPS of $12.35 for the next fiscal year and a forward P/E of 21.4x, the implied target is approximately $264, representing 42% upside from the current price of $185.39. The high EPS estimate of $12.48 suggests a target of $267, while the low estimate of $12.22 implies $261. The tight range of EPS estimates indicates strong conviction among analysts. Recent ratings from RBC Capital, Raymond James, and Wells Fargo have been positive, with upgrades and reiterations of Overweight/Strong Buy, while Evercore and Goldman Sachs maintain neutral stances. The overall sentiment is cautiously optimistic, with the consensus expecting a recovery driven by Verisk's data moat and cash flow generation.
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Bulls vs Bears: VRSK Investment Factors
Verisk presents a mixed picture: strong cash flows, high margins, and a forward valuation discount are offset by decelerating revenue, AI disruption fears, and margin compression. The bull case rests on the durability of its data moat and the potential for earnings growth to justify the forward P/E, while the bear case centers on whether AI will erode its competitive advantage and whether growth can reaccelerate. The single most important tension is whether Verisk's proprietary data and regulatory ties can withstand the commoditizing force of AI—if the moat holds, the stock is deeply undervalued; if it weakens, further multiple compression is likely. Currently, the evidence slightly favors the bulls given the forward P/E discount and strong cash flow, but the margin compression and growth deceleration warrant caution.
Bullish
- Strong Free Cash Flow Generation: Verisk generated $1.19 billion in free cash flow over the trailing twelve months, providing ample capacity for debt reduction, dividends, and strategic investments. This cash flow supports a dividend yield of 0.8% and a payout ratio of 27.6%, indicating sustainability.
- High Operating Margins: Operating margin of 44.6% (Q4 2025) reflects Verisk's efficient cost structure and pricing power, well above the software-services industry average. This profitability provides a buffer against revenue deceleration.
- Attractive Forward Valuation: The forward P/E of 21.4x is below the industry average of 25x, implying a discount. With analysts estimating EPS of $12.35, the stock appears undervalued relative to its historical range (17x-130x trailing P/E).
- Regulatory Moat and Proprietary Data: Verisk's roots in Insurance Services Office provide a unique regulatory moat and proprietary datasets that are difficult to replicate. This competitive advantage supports long-term pricing power and customer retention.
Bearish
- Revenue Growth Deceleration: Q4 2025 revenue growth of 5.9% YoY is down from 6.9% in Q2 2025, indicating a slowing trajectory. This modest growth may not justify the current valuation multiple if it continues to decelerate.
- AI Disruption Risk: The stock has fallen 38.8% over the past year amid fears that AI could commoditize Verisk's data advantage. While the moat is strong, the market is pricing in a real risk of technological disruption.
- High Debt-to-Equity Ratio: Debt-to-equity of 16.3x is extremely high, reflecting significant leverage. Although interest coverage of 6.0x is adequate, the elevated debt load increases financial risk, especially if interest rates remain high.
- Gross Margin Compression: Gross margin declined from 70.3% in Q2 2025 to 59.6% in Q4 2025, a drop of over 10 percentage points. This compression signals rising cost pressures that could erode profitability if not reversed.
VRSK Technical Analysis
Verisk is in a sustained downtrend, with a 1-year price change of -38.8% and the current price of $185.39 sitting at 60.5% of its 52-week range ($155.94–$306.45). This positioning near the lower end of the range suggests the stock is deeply out of favor, potentially offering a value opportunity if fundamentals hold, but also reflecting persistent selling pressure. The 52-week low of $155.94 provides a critical support level, while the high of $306.45 represents significant overhead resistance. With a beta of 0.688, Verisk is less volatile than the market, meaning its decline has been more orderly than the broader sell-off, but also that a recovery may lack aggressive momentum. A breakout above $306.45 would signal a trend reversal, while a breakdown below $155.94 could trigger further downside.
Beta
0.69
0.69x market volatility
Max Drawdown
-50.0%
Largest decline past year
52-Week Range
$156-$306
Price range past year
Annual Return
-35.5%
Cumulative gain past year
| Period | VRSK Return | S&P 500 |
|---|---|---|
| 1m | +5.4% | +1.0% |
| 3m | +13.5% | +7.9% |
| 6m | -13.6% | +8.5% |
| 1y | -35.5% | +20.1% |
| ytd | -12.3% | +9.9% |
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VRSK Fundamental Analysis
Verisk's revenue trajectory remains steady, with Q4 2025 revenue of $778.8 million growing 5.9% year-over-year, though growth has decelerated from the 6.9% pace seen in Q2 2025. The insurance segment, which constitutes virtually all revenue, continues to drive growth, but the pace is modest. The company is highly profitable, with Q4 2025 net income of $197.2 million and a gross margin of 59.6%, though margins have compressed from the 70.3% level in Q2 2025 due to higher cost of revenue. Operating margin remains strong at 43.6%, indicating efficient cost management. Verisk generates robust free cash flow of $1.19 billion on a trailing twelve-month basis, and its balance sheet shows a current ratio of 1.20, indicating adequate liquidity. However, the debt-to-equity ratio of 16.3 is elevated, reflecting significant leverage, though interest coverage of 6.0x suggests debt service is manageable. ROE is an extraordinary 293.9%, driven by high leverage and strong profitability, but this metric should be interpreted with caution due to the equity base being small relative to debt.
Quarterly Revenue
$778800000.0B
2025-12
Revenue YoY Growth
+5.9%
YoY Comparison
Gross Margin
59.6%
Latest Quarter
Free Cash Flow
$1.2B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is VRSK Overvalued?
Given Verisk's positive net income, the trailing P/E ratio of 34.4x is the primary valuation metric. The forward P/E of 21.4x implies a significant earnings growth expectation, as the market prices in a sharp rebound in profitability. Compared to the software-services industry average P/E of approximately 25x, Verisk's trailing multiple trades at a 38% premium, reflecting its high margins and competitive moat. However, the forward P/E suggests a discount to the industry, indicating that the market expects earnings to catch up. Historically, Verisk's trailing P/E has ranged from 17x to 130x over the past five years, and the current 34.4x is near the lower end of that range, suggesting the stock is relatively cheap by its own historical standards. This could indicate a value opportunity if the company's growth and margins stabilize, but it also reflects the market's skepticism about future growth.
PE
34.4x
Latest Quarter
vs. Historical
Low-End
5-Year PE Range 17x~130x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
20.1x
Enterprise Value Multiple
Investment Risk Disclosure
Financial & Operational Risks: Verisk's high debt-to-equity ratio of 16.3x is a significant financial risk, though interest coverage of 6.0x provides some comfort. The gross margin compression from 70.3% in Q2 2025 to 59.6% in Q4 2025 indicates rising cost pressures that could further squeeze profitability. Revenue growth deceleration to 5.9% YoY in Q4 2025 from 6.9% in Q2 2025 suggests the company may struggle to maintain momentum, which is critical given its premium valuation. Free cash flow of $1.19 billion is robust, but any sustained downturn in the insurance industry could impact Verisk's subscription-based revenue.
Market & Competitive Risks: The stock's 38.8% decline over the past year reflects market fears that AI could commoditize Verisk's data advantage, a risk that may not be fully priced in. With a beta of 0.688, Verisk is less volatile than the market, but its relative strength over the past year is -59.4% vs. the S&P 500, indicating severe underperformance. The forward P/E of 21.4x, while below the industry average, still implies expectations of earnings growth that may not materialize if AI disruption accelerates. Recent news highlights the AI threat as a key overhang, and any negative developments could trigger further selling.
Worst-Case Scenario: If AI effectively commoditizes Verisk's data, revenue growth could stall or turn negative, margins could compress further, and the stock could re-rate to a lower multiple. The 52-week low of $155.94 represents a 15.9% downside from the current price of $185.39. In a severe bear case, the stock could fall to $130, a 30% decline, if earnings disappoint and the P/E contracts to 15x. This scenario would be triggered by a major competitor launching a disruptive AI-based solution or a regulatory change undermining Verisk's moat.
FAQ
The primary risk is AI disruption, which could commoditize Verisk's proprietary data and erode its competitive advantage. This risk is already priced into the stock's 38.8% decline, but any negative news could trigger further selling. Financial risks include a high debt-to-equity ratio of 16.3x, which amplifies the impact of rising interest rates, though interest coverage of 6.0x is adequate. Operational risks include gross margin compression from 70.3% to 59.6% over the past year, indicating cost pressures. Finally, revenue growth deceleration to 5.9% YoY poses a risk if the trend continues, as the stock's valuation depends on steady expansion. The most severe risk is a combination of these factors leading to a re-rating to a lower P/E multiple.
The 12-month forecast is cautiously optimistic. In the base case (45% probability), Verisk trades between $200 and $240, driven by steady 5-6% revenue growth and stable margins. In the bull case (30% probability), the stock could reach $240-$280 if AI fears recede and growth accelerates. In the bear case (25% probability), the stock could fall to $140-$180 if disruption materializes. The most likely scenario is the base case, assuming Verisk's moat holds and growth remains modest. The analyst consensus supports upside, with an average target of $264, but near-term headwinds may limit gains. Investors should focus on the next earnings report for confirmation of the trend.
Verisk appears undervalued relative to its history and peers. The trailing P/E of 34.4x is near the lower end of its 5-year range of 17x-130x, suggesting the stock is cheap by its own standards. The forward P/E of 21.4x is below the software-services industry average of 25x, implying a discount. However, the market is pricing in skepticism about future growth, as reflected in the decelerating revenue trend. The PEG ratio is negative due to negative earnings growth expectations, but this is distorted by one-time items. Overall, the valuation is reasonable for a company with Verisk's margins and cash flow, and the forward multiple offers a margin of safety if growth stabilizes.
Verisk is a good buy for long-term investors seeking a high-quality, defensive business at a reasonable price. The stock offers 42% upside to the analyst average target of $264, supported by a forward P/E of 21.4x that is below the industry average. However, the stock has fallen 38.8% over the past year due to AI disruption fears, and near-term volatility is likely. The biggest downside risk is that AI commoditizes Verisk's data advantage, which could lead to further multiple compression. For investors with a 3-5 year horizon who believe in the durability of Verisk's moat, the current price presents an attractive entry point. For short-term traders, the stock may remain range-bound until the AI narrative clarifies.
Verisk is best suited for long-term investment, given its defensive characteristics (beta of 0.688), strong cash flows, and competitive moat. The stock's 38.8% decline over the past year has created a potential value opportunity for patient investors willing to hold through the AI uncertainty. Short-term trading is riskier due to the stock's low volatility and lack of near-term catalysts; the stock may remain range-bound until the AI narrative clarifies. A minimum holding period of 3-5 years is recommended to allow the company's fundamentals to compound. The dividend yield of 0.8% provides a small income component, but the primary return driver is capital appreciation from multiple expansion or earnings growth.
