Why Trupanion Stock Flopped on Friday

The company’s first-quarter loss was deeper than analysts expected.

The company’s first-quarter loss was deeper than analysts expected.

What happened

Trupanion (TRUP -7.78%) was a dog of a stock on Friday. The company, a highly specialized business that concentrates on insurance products for pets, saw its share price decline by almost 8% on the day. That was because of first-quarter earnings that fell short of expectations for profitability.

So what

In Trupanion’s inaugural quarter of this year, total revenue amounted to $206 million, a sturdy 33% improvement on a year-over-year basis. This was helped in no small measure by a 34% increase in the number of total enrolled pets to nearly 1.3 million animals. Subscription-enrolled pets totaled nearly 737,000, and subscription business revenue was 23% higher at just under $140 million.

Further down the profit-and-loss statement, the company’s net loss narrowed to $8.9 million ($0.22 per share), from the first-quarter 2021 deficit of $12.4 million.

A gray kitten with eyes closed and tongue sticking out.

Image source: Getty Images.

The average analyst estimate for revenue was a bit over $202 million, but the projection for per-share net loss was only $0.17.

Trupanion’s top- and bottom-line improvements were due to both new and legacy business. The company quoted CEO Darryl Rawlings as saying that “Q1 was a solid growth quarter, benefiting from another quarter of record pet additions and consistently strong levels of retention in our subscription business.”

Now what

That bottom-line miss, although not drastic, helped push several analysts close to the bear den. Four prognosticators adjusted their expectations for Trupanion in the wake of the earnings report, with three lowering their price targets.

Among these was Stifel‘s Jonathan Block, who now believes the specialty insurer is worth $67 per share, down from the previous level of $84. Block, however, is maintaining his existing recommendation (hold) on the stock. That also holds true for the two other price-target cutters, Canaccord Genuity‘s Maria Ripps and Piper Sandler‘s John Barnidge, both of whom are keeping the equivalent of buy recommendations.

Read this article on Motley Fool

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