Verisk stock lags sector as AI adoption offsets rising costs

Verisk Analytics, Inc. stock has fallen 20.3% over the past year, a decline that contrasts with a 7% dip across the industry and a 20.2% rally in the Zacks S&P 500 Composite. Zacks Investment Research maintains a Zacks Rank #3 (Hold) for the company, citing mixed signals between recurring revenue stability and rising operating expenses.

The Zacks Consensus Estimate projects Verisk's 2026 revenues to reach $3.2 billion, representing 5% year-over-year growth. For 2027, analysts expect revenues to increase 6.5% to $3.4 billion. Earnings per share are forecast to jump 7.7% to $7.71 in 2026, followed by a 13.1% rise to $8.72 in 2027.

Subscription-backed business models provide stable income streams for Verisk. In the second quarter of 2026, subscription revenues rose 8% year over year on an organic constant currency basis, following 9.3% growth in the prior year's quarter. These subscriptions accounted for 83% of total revenues, reducing exposure to transactional volatility. Growth in underwriting, catastrophe risk solutions, and antifraud analytics is driven by strong renewals and price realization.

Artificial intelligence initiatives are creating new monetization opportunities. XactAI, Verisk's AI-driven claims automation solution, achieved approximately 10X user growth, reaching nearly 7,000 licensees. Premium Audit AI has supported stronger subscription renewals through improved functionality. A collaboration with Anthropic introduced AI-fueled connectors for underwriting and claims, with a top-10 insurer adopting the technology.

Insurance analytics contributed to organic growth in the second quarter of 2026, with underwriting revenues rising 5.6% and claims revenues increasing 6.1% on an organic constant currency basis. During the first half of the year, Verisk added eight contributors to Core Lines and ten to excess and surplus data sources. This expanding proprietary dataset supports product differentiation and cross-selling opportunities.

However, the insurance market remains sluggish. Transactional revenues declined 4.2% on an organic constant currency basis in the second quarter of 2026, reflecting lower property-related activity and fewer weather events. Transactional revenues made up 17% of the top line during that period. Management anticipates that soft commercial property market conditions and weather-related weakness will persist through the second half of 2026.

Operating costs have risen significantly. Selling, general and administrative expenses increased 20.8% year over year in the second quarter of 2026, stemming from costs linked to acquisitions, dispositions, and AccuLynx, as well as elevated spending on consulting and employees. Net interest expenses climbed to $53 million from $36 million in the year-ago quarter, while the effective tax rate increased to 24.6% from 22.7%. These factors contributed to a 10% year-over-year decline in net income.

Zacks Investment Research notes that Figure Technology Solutions and Ralliant Corporation currently hold Zacks Rank #1 (Strong Buy) in the broader Business Services sector.