Is Porch Group undervalued? Berenberg’s Justin Ages thinks so

Porch Group Inc (NASDAQ: PRCH) has had a rough couple of months with the stock down about 45% since November 16^th, which makes up for a great opportunity to buy it at a discount, says Berenberg’s Justin Ages.

Ages’ comments on CNBC’s ‘The Exchange’

According to Ages, Porch is a smart pick for investors interested in playing the housing market. Stating his reasons why he likes the stock, he said on CNBC’s “The Exchange”:

Ages rates the Washington-headquartered company at “buy” with a price target of $21 a share that represents a more than 45% upside from here. Porch debuted on the Nasdaq Stock Exchange in early 2020 at a per-share price of about $10.

Porch Group deserves a higher multiple

Porch is currently trading at a multiple of close to 4.5 but based on his growth expectations, Ages says it is undervalued and deserves to trade at a multiple of around 5.0. He agreed it wasn’t profitable yet but didn’t see it as a concern since Porch is investing aggressively in growth for now.

Porch also bought American Home Protect for $38.6 million in 2021. Once the $1.41 billion company slows down on investments, Ages added, its gross profit will pick up quickly. Porch Group will report its quarterly earnings in March.