In light of Verisk Analytics' (VRSK) Q4 2025 earnings release this week, how do the reported organic growth rates in the 'Underwriting & Rating' segment compare to consensus expectations, and what does the 2026 margin guidance imply about the company's ability to scale its generative AI-driven risk assessment tools?

Verisk Analytics (VRSK) reported Q4 2025 results that exceeded top- and bottom-line expectations, driven by resilient subscription demand and a strong performance in its core underwriting segment. While the 2026 revenue and EPS guidance arrived slightly below consensus, the margin outlook suggests a disciplined approach to scaling generative AI (GenAI) capabilities without compromising profitability. Underwriting & Rating Segment Performance The 'Underwriting & Rating' segment remains the primary engine of Verisk’s organic growth, benefiting from the steady adoption of data-driven risk assessment tools. Reported Organic Growth: The segment achieved organic constant currency (OCC) revenue growth of 7.2% in Q4 2025. Total reported revenue for the segment reached $556 million , an 8.7% increase year-over-year. Comparison to Consensus: This performance surpassed Wall Street’s expectations, as analysts had projected segment revenue of approximately $541.1 million . Growth Drivers: Management attributed the beat to strong demand for forms, rules, and loss cost services, alongside significant contributions from catastrophe and risk solutions. Subscription-based revenues, which now account for 84% of total company revenue, provided a stable foundation that offset volatility in transactional volumes. 2026 Margin Guidance and AI Scaling Implications Verisk’s 2026 guidance reflects a strategic pivot toward "self-funded" innovation, where operational efficiencies from legacy businesses are reinvested into GenAI and agentic AI tools. Margin Outlook: For the full year 2026, Verisk projects an adjusted EBITDA margin of 56.0% to 56.5% . This represents a modest expansion from the 55.8% normalized operational baseline established in 2025 (which excluded a 40 bps non-recurring FX benefit). AI Scaling Capacity: The guidance implies that Verisk can scale its GenAI-driven tools—such as XactGen, Exact AI, and the Commercial GenAI Underwriting Assistant—while maintaining high-tier profitability. Management confirmed they are currently managing over 35 AI-related projects. Efficiency vs. Investment: The "modest but meaningful" margin expansion suggests that the productivity gains realized from AI (e.g., automated claims estimation and real-time risk appetite insights) are sufficient to cover the substantial R&D and infrastructure costs associated with these technologies. It signals a transition from the "investment phase" to an "operational leverage phase" for its AI suite. Strategic Portfolio Adjustments The company’s ability to focus on AI scaling is further supported by recent portfolio streamlining: Divestitures: The sale of Verisk Marketing Solutions (VMS) contributed to a cleaner focus on the core insurance franchise, despite creating a $0.11 headwind to 2026 adjusted EPS. Capital Allocation: Verisk announced a $1.5 billion accelerated share repurchase (ASR) program and an 11% dividend increase, reflecting confidence in its free cash flow, which reached $1.19 billion for the full year 2025. Risks and Uncertainties Transactional Headwinds: Transactional revenues declined -6.5% on an OCC basis in Q4, primarily due to low weather-related activity and softness in personal lines auto. Guidance Conservatism: The 2026 revenue target of $3.19B to $3.24B is slightly below the prior consensus of $3.25B , potentially reflecting management's caution regarding the timing of government contract renewals and the full impact of the VMS divestiture. AI Displacement Concerns: While management views AI as a tailwind, the market remains sensitive to potential disruption of traditional data moats by open-source or third-party GenAI models.

Given the recent surge in severe convective storm activity in early 2026, to what extent is the increased demand for Verisk’s (VRSK) Extreme Event Solutions and high-resolution climate modeling suites expected to accelerate subscription-based revenue growth in the first half of fiscal year 2026?

The recent surge in severe convective storm (SCS) activity in early 2026, characterized by high-frequency, high-severity events such as Winter Storm Fern in the U.S. and Storms Nils and Oriana in Europe, is expected to serve as a significant catalyst for Verisk’s (VRSK) Extreme Event Solutions. While the company’s reported revenue in the first half of 2026 (H1 2026) faces technical headwinds from divestitures, the underlying demand for high-resolution climate modeling is accelerating the transition toward a more durable, subscription-heavy revenue mix. Macro Context: SCS as a Primary Insured Peril By early 2026, severe convective storms have solidified their position as the costliest insured peril of the 21st century. In 2025, SCS generated $61B in global insured losses, and the early 2026 surge—including Winter Storm Fern, which is estimated to have caused $4B in property and auto losses—has intensified the "bullseye effect" where increasing population density in high-risk areas compounds financial exposure. This volatility is driving a structural shift in how insurers utilize risk modeling, moving from periodic assessments to continuous, high-resolution monitoring. Subscription Revenue Dynamics and H1 2026 Outlook Verisk’s strategic pivot toward a subscription-based model has reached a critical mass, with recurring revenue now accounting for 84% of total revenue as of Q4 2025. Growth Acceleration: Subscription revenue grew 7.7% on an organic constant-currency (OCC) basis in late 2025. The early 2026 storm activity is expected to accelerate this growth in H1 2026 as insurers seek to "smooth" the volatility of transactional costs by locking in enterprise-wide modeling suites. The Q1 "Trough" Effect: Despite strong underlying demand, management has cautioned that Q1 2026 reported revenue will likely be the "trough" for the year, declining by a low single-digit percentage compared to Q4 2025. This is primarily due to the divestiture of Verisk Marketing Solutions, which presents a -$0.11 headwind to EPS. Transactional Recovery: While transactional revenue (16% of total) declined -6.5% in Q4 2025 due to "muted weather activity," the surge in early 2026 storms is expected to drive a sharp recovery in volume-sensitive claims estimating tools (e.g., Xactimate) alongside subscription growth. Catalysts in Extreme Event Solutions & Climate Modeling The demand for Verisk’s high-resolution climate modeling suites is being bolstered by two primary factors in H1 2026: 1. Product Innovation & Partnerships: In February 2026, Verisk launched a major collaboration with S&P Global Energy to deliver insurance-adjusted climate risk intelligence. This partnership integrates climate-adjusted inland flood data through 2050 into Verisk’s Touchstone platform, directly addressing the regulatory and stress-testing needs of global financial institutions. 2. Model Updates: The August 2025 update to the U.S. Severe Thunderstorm Model has seen rapid adoption in early 2026. The model’s ability to explicitly simulate sub-perils like freezing rain and its impact on power infrastructure (a major driver of the $4B Fern loss) has made it an essential tool for H1 2026 renewals. Risk and Implementation Considerations While the demand environment is robust, Verisk’s H1 2026 performance remains subject to: Personnel and Interest Costs: Higher interest expenses, projected at $190M–$200M for FY 2026, and rising personnel costs may offset some of the margin gains from subscription scaling. Portfolio Pruning: The termination of the AccuLynx acquisition and the sale of non-core assets reflect a disciplined focus on high-margin insurance analytics, but they create short-term "noise" in year-over-year revenue comparisons. In summary, the early 2026 storm surge is expected to accelerate Verisk’s subscription-based revenue growth by reinforcing the necessity of high-resolution, forward-looking risk models. While divestitures will mask this growth in reported Q1 figures, the underlying organic momentum in Extreme Event Solutions is positioned to drive Verisk toward its FY 2026 revenue target of $3.19B–$3.24B .

Following the strategic divestiture of non-core assets concluded in late 2025, how does Verisk Analytics' (VRSK) current capital allocation strategy—specifically the February 2026 share buyback authorization—impact the stock's valuation premium relative to its data analytics peers like FactSet or MSCI?

Following the conclusion of its non-core asset divestiture program in late 2025, Verisk Analytics (VRSK) has transitioned into a "pure-play" insurance data and analytics entity. The February 2026 capital allocation updates, headlined by a significant share repurchase authorization, serve as a strategic mechanism to defend and potentially expand its valuation premium in a bifurcated data analytics peer group. Strategic Context: The Pure-Play Transition The sale of Verisk Marketing Solutions on December 31, 2025, for a net cash price of $80.0M marked the final step in Verisk’s multi-year portfolio reshaping. By exiting non-core sectors like Energy (Wood Mackenzie) and Marketing, Verisk now derives approximately 83% of its revenue from recurring subscriptions within the global property and casualty (P&C) ecosystem. While the divestiture created a short-term adjusted EPS headwind of -$0.11 , it has structurally improved the company's margin profile. Verisk’s FY 2026 guidance projects an adjusted EBITDA margin of 56.0%–56.5% , a notable increase from its normalized 2025 baseline of 55.8% . Capital Allocation: The February 2026 Buyback Catalyst On February 18, 2026, Verisk’s board authorized a $2.5B share repurchase program, representing approximately 10.1% of its outstanding market capitalization. This is being executed via an immediate $1.5B accelerated share repurchase (ASR) program. This aggressive capital return strategy impacts valuation through three primary channels: EPS Accretion: The buyback directly offsets the earnings dilution from recent divestitures, supporting a 2026 adjusted EPS guidance range of $7.45–$7.75 . Confidence Signaling: Management’s decision to deploy nearly $2.0B in total interest expense and cash toward buybacks signals a belief that the current multiple does not fully reflect the stability of the insurance-only model. Multiple Support: By reducing the equity float, Verisk increases its "scarcity value" as a high-margin, low-churn data utility, which historically commands a premium multiple. Comparative Valuation: VRSK vs. Peers As of mid-February 2026, Verisk’s valuation reflects a distinct middle ground between its primary data analytics peers, FactSet (FDS) and MSCI (MSCI). | Metric (Feb 2026) | Verisk (VRSK) | FactSet (FDS) | MSCI (MSCI) | | :--- | :--- | :--- | :--- | | Trailing P/E | 28.3x | 12.5x | 33.5x | | Forward P/E | 24.0x | 11.5x | 29.8x | | EV/EBITDA | 18.9x | 9.5x | 23.1x | Impact Relative to FactSet (FDS) Verisk maintains a massive valuation premium over FactSet, which has seen its P/E multiple compress by over -50% from historical averages. The market currently views FactSet as more vulnerable to generative AI disruption in financial research workflows. Verisk’s buyback reinforces its "defensive moat" narrative—insurance carriers are legally and operationally tethered to Verisk’s proprietary actuarial data, a moat that appears more resilient to AI commoditization than FactSet’s financial data. Impact Relative to MSCI (MSCI) Verisk continues to trade at a slight discount to MSCI, which remains the "gold standard" for high-margin index providers with a trailing P/E of 33.5x . However, the $2.5B buyback authorization is a bid to close this gap. By aggressively retiring shares, Verisk is attempting to match MSCI’s capital efficiency and high ROE (currently 437.9% for VRSK due to its lean equity base). Risks and Uncertainties Leverage Profile: Funding the $1.5B ASR has contributed to a projected 2026 interest expense of $190M–$200M . If organic growth slows, the increased debt service could pressure the very valuation premium the buyback seeks to protect. Transactional Volatility: Approximately 16% of Verisk’s revenue remains transactional and sensitive to weather patterns. A period of low catastrophe activity could lead to revenue misses, as seen in Q4 2025 where transactional revenue fell -8.8% . Regulatory Scrutiny: Ongoing litigation regarding telematics data privacy and the failed AccuLynx acquisition (resulting in $33.9M in sunk costs) remain overhangs that could cap multiple expansion.

Verisk Analytics, Inc. (VRSK) Stock Price & AI Analysis

GoAI Score

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Valuation

50Fair Value

Sentiment

100Bullish

Risk

88Low Risk

Momentum

3Negative

Institutional-Grade Intelligence

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Actionable Intelligence

AI-driven stance, execution logic & risk thresholds

Catalyst Roadmap

Event timeline with expected impact & market context

Deep Insights

Fact-checked analysis & score logic breakdown

Financial Statements

Margin Trends

Gross

67.3%▼1.4pp

Revenue after COGS

Operating

44.6%▲1.1pp

After operating expenses

Net

29.6%▼3.7pp

Bottom-line profitability

Gross Margin

Operating Margin

Net Margin

Valuation Snapshot

P/E Ratio

34.2

Price vs earnings

EV/EBITDA

20.1

Enterprise value

FCF Yield

3.8%

Cash generation

Earnings Yield

2.9%

Inverse of P/E

Capital Efficiency

101

GoAI Quality ScoreExcellent

ROEReturn on Equity

293.9%Strong

ROAReturn on Assets

14.7%Strong

ROICReturn on Invested Capital

19.6%Strong

Financial Health

Current RatioAdequate

1.20

Short-term solvency (>1.5)

Net Debt / EBITDAManageable

1.69x

Debt repayment capacity (<3x)

Income QualityStrong

1.58

Cash backs earnings (>1)

Revenue & Profitability

Revenue

Net Income

Net Loss

Income Statement

Metric	FY2025	FY2024	FY2023	FY2022	FY2021
Revenue	$3.07B	$2.88B	$2.68B	$2.50B	$2.46B
Gross Profit	$2.07B	$1.98B	$1.80B	$1.67B	$1.61B
Gross Margin	67.3%	68.7%	67.3%	67.0%	65.3%
Operating Income	$1.37B	$1.25B	$1.13B	$1.41B	$911.40M
Net Income	$908.30M	$957.50M	$614.40M	$954.30M	$666.30M
Net Margin	29.6%	33.2%	22.9%	38.2%	27.1%
EPS	$6.51	$6.74	$4.19	$6.04	$4.12

Average Price Target

$235.00▲ 28.8% Upside

Past 12 Months

12 Month Forecast

Based on 50 Wall Street analysts offering 12 month price targets for Verisk Analytics, Inc., the average price target is $235.00, with a high forecast of $280.00 and a low forecast of $223.00. The average price target represents a 28.8% increase from the current price of $182.50.

Highest

$280.00

Average

$235.00

Lowest

$223.00

Rating Distribution

Strong Buy

0

0%

Buy

9

36%

Hold

15

60%

Sell

1

4%

Strong Sell

0

0%

Recent Analyst Ratings

FirmActionRatingDate

Wells Fargo● Maintain

Overweight

2026-02-19

Goldman Sachs● Maintain

Neutral

2026-02-19

JP Morgan● Maintain

Overweight

2026-02-19

RBC Capital● Maintain

Outperform

2026-02-19

Evercore ISI Group● Maintain

In Line

2026-02-19

Wells Fargo● Maintain

Overweight

2026-02-11

Morgan Stanley● Maintain

Equal Weight

2025-12-17

Goldman Sachs● Maintain

Neutral

2025-10-30

RBC Capital● Maintain

Outperform

2025-10-30

Evercore ISI Group● Maintain

In Line

2025-10-30

Earnings History & Surprises

BEAT RATE

83%

Last 18 quarters

AVG SURPRISE

+5.2%

EPS vs Estimate

BEATS / MISSES

15/3

Last 18 quarters

LATEST EPS

$1.82

Q1 '26

QUARTERLY EPS TREND

Estimated

Beat

Miss

QUARTERLY DETAIL

Q1 '26

+13.7%

$1.82 vs $1.60

Q4 '25

+1.2%

$1.72 vs $1.70

Q3 '25

+5.6%

$1.88 vs $1.78

Q2 '25

+3.0%

$1.73 vs $1.68

Q1 '25

+0.6%

$1.61 vs $1.60

Q4 '24

+4.4%

$1.67 vs $1.60

Q3 '24

+6.1%

$1.74 vs $1.64

Q2 '24

+6.5%

$1.63 vs $1.53

Q1 '24

-2.8%

$1.40 vs $1.44

Q4 '23

+3.4%

$1.52 vs $1.47

Q3 '23

+7.1%

$1.51 vs $1.41

Q2 '23

+8.4%

$1.29 vs $1.19

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