Overview
Keefe, Bruyette & Woods trimmed its price objective for Goosehead Insurance Inc. (NASDAQ:GSHD) to $85 from $95 but kept an Outperform rating on the stock after the company set fiscal 2026 guidance that landed slightly below market expectations. The adjustment reflects the firms reaction to the insurers projected top-line performance and modest margin compression for the year.
Guidance vs. Consensus
Gooseheads guidance called for written premium growth of 12-20% and revenue growth of 10-19%, along with a modest contraction in margins for fiscal 2026. These midpoints compared unfavorably with consensus forecasts that anticipated 19% premium growth, 17% revenue growth, and a 130 basis point year-over-year margin decline. The difference in midpoints prompted Keefe, Bruyette to lower revenue assumptions and ultimately reduce its price target.
Recent Results and Drivers
The company reported adjusted EBITDA of $39 million, beating Keefe Bruyettes estimate of $36 million and the consensus estimate of $34 million, largely due to stronger contingent commissions. According to InvestingPro data cited by the analyst, Gooseheads last twelve months EBITDA stands at $87.49 million on revenue of $353.23 million, representing 25.01% year-over-year revenue growth.
Management signaled expectations for a slower first half of 2026, with increased pricing pressures, followed by acceleration in the second half driven by reduced pricing pressure and contributions from new producers and partnerships. Keefe Bruyette factored a slower start to the year into its model when trimming 2026 and 2027 estimates.
Valuation and Modeling
To derive the revised $85 price target, Keefe, Bruyette applied a multiple of 27 times enterprise value to adjusted EBITDA on its 2026 estimates. The firm noted that while Goosehead trades at a P/E ratio of 44.78, the stocks PEG ratio of 0.61 indicates a relatively low P/E in relation to near-term earnings growth, according to InvestingPros analytics.
Analyst Landscape and Market Reaction
Despite trimming estimates and the price target reduction, Keefe, Bruyette retained its Outperform rating and expects investor sentiment to improve once the market recognizes mid-teens organic growth against a challenging industry backdrop. Other broker actions show a spectrum of views: Piper Sandler upgraded Goosehead to Overweight from Neutral and kept a $69.00 price target, noting the companys guidance aligned with its own expectations. Separately, Citizens lowered its price target to $125 from $140 but maintained a Market Outperform rating, citing the companys potential for robust growth and expanding margins in a large market.
Quarterly Results Snapshot
In the most recent quarter, Goosehead reported revenue of $105.3 million, exceeding analyst expectations of $99.34 million and marking a 12% year-over-year increase. However, earnings per share came in at $0.48, below the anticipated $0.57. These mixed results have contributed to a range of analyst responses while leaving an overall tilt toward a positive medium-term outlook among some firms.
Bottom Line
Keefe, Bruyettes move to lower its price target reflects caution on near-term revenue and margin trajectory after fiscal 2026 guidance that sat under consensus midpoints. Offsetting that caution were beats on adjusted EBITDA and indications of continued revenue growth, as well as the companys plan for a second-half acceleration driven by reduced pricing pressure and new producer partnerships. Other broker notes and upgrades show a mixed but generally constructive sentiment from the sell side.