Home services stock Porch Group could nearly triple from current levels, Compass Point says

Shares of Porch Group may have plummeted 75.3% this year, but the homes services company is poised for a rebound and its shares could nearly triple, Compass Point Research said. Analyst Jason Weaver initiated coverage of the stock with a buy rating on Wednesday, noting that the company’s “tech-enabled approach” and unique business model gives it a competitive edge. “The company’s strategy of offering free ERP/CRM software to home inspectors and other service providers that share their customer data, offers other network members enhanced ability to identify high-potential clients weeks earlier than their competitors with more traditional approaches–which in our view results in a high LTV/CAC ratio for PRCH,” Weaver wrote. The initiation comes two days after JPMorgan initiated the stock with an overweight rating, noting that Porch’s business-to-business strategy helps it standout. Weaver believes the company is targeting an “under-penetrated” and “fragmented” industry and its unique business model can drive compound revenues in the 30% to 40% range near-term. Plus, Porch’s revenue combination minimizes its risk to ongoing macro headwinds. “With over 2/3 of the company’s revenue base consisting of recurring SaaS subscription fees and Homeowners’ Insurance/Warranty premium revenues, the company displays much lower cyclical exposure than that of the residential real estate business overall,” Weaver said. Along with the upgrade, Compass slapped an $11.50 price target on Porch, meaning shares could nearly triple from Tuesday’s close. — CNBC’s Michael Bloom contributed reporting