SelectQuote Inc (SLQT)

[JohnCM]

SelectQuote stock tanks after fiscal Q2 miss, guidance cut; Citi downgrades

Feb. 08, 2022 7:30 AM ETSelectQuote, Inc. (SLQT)By: Liz Kiesche, SA News
Stock exchange crash.

SelectQuote (NYSE:SLQT) stock plunges 51% in premarket trading after the online insurance brokerage's fiscal Q2 earnings missed consensus by a wide margin and expects 2022 results to fall well short of consensus.

Citi analyst Daniel Grosslight downgrades the stock to Neutral/High Risk from Buy/High Risk and slashes his price target to $4 from $14.

The reasons behind the Q4 miss weren't surprising, Grosslight said in a note to clients, pointing to hiring delays, CMS marketing review, less shopping amid greater plan parity, and lower persistency. "What was surprising with the quantum of the miss and the $145M of negative tail adjustment revenue the company took this quarter (vs $65M expected in FQ4)," he said.

In addition, the company cut guidance, "titrating growth down," and said it's focusing more on cash flow and predictability.

Note that in December, SA Quant rating warned that SelectQuote (SLQT) was at high risk of performing poorly, on decelerating momentum and negative EPS revisions.