Frontdoor’s 2021 Revenue Outlook Tops Estimates After 4Q Beat

Frontdoor reported better-than-expected fourth quarter results yesterday and issued 2021 revenue guidance that topped the consensus estimate.

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Frontdoor’s (FTDR) 4Q earnings of $0.08 per share beat analysts’ expectations of $0.05 per share but fell 68% year-over-year. The decline in its bottom-line reflects weak adjusted EBITDA, which dropped 33% during the reported quarter.

Its 4Q revenues of $323 million grew 8% year-over-year and exceeded analysts’ expectations of about $321.2 million. Revenues for the renewals and direct-to customer segments grew 8% and 13%, respectively, year-over-year, while 4Q real estate revenues increased by 1%.

As for 1Q, Frontdoor expects to report revenues in the range of $325 million to $330 million, compared to analysts’ expectations of $321.3 million. Meanwhile, Frontdoor projects 2021 revenues to be in the range of $1.63-$1.65 billion, which is higher than the Street’s estimates of $1.62 billion.

The company’s CEO Rex Tibbens said, “In 2021, we are focused on advancing initiatives to drive double-digit revenue growth, automating processes, expanding our customer retention initiatives and delivering on the vision for our emerging businesses.” (See Frontdoor stock analysis on TipRanks)

Following the results, Oppenheimer analyst Ian Zaffino raised the stock’s price target to $60 from $55 and maintained a Buy rating. In a note to investors, Zaffino said, “Management is focused on growth and continues to target double-digit topline growth within its core businesses, helped by key initiatives, including investments and dynamic pricing.”

The Moderate Buy consensus rating on FTDR stock is based on 2 unanimous Buys and the average analyst price target of $58.50 implies upside potential of about 4.3% from current levels. Shares have gained about 28.2% over the past year.

However, TipRanks’ Hedge Fund Trading Activity tool shows that confidence in Frontdoor is currently Negative as 5 hedge funds decreased their cumulative holdings in FTDR by 238,400 shares in the last quarter.