EF Hutton bullish on Pineapple Financial stock By Investing.com

On Wednesday, Pineapple Financial Inc. (NYSE: PAPL) received a positive outlook from EF Hutton, as the firm initiated coverage with a Buy rating and a price target of $5.50. The cloud-based FinTech company, which has recently expanded into the insurance sector, now offers a range of products including mortgage insurance, which is mandatory for all Canadian mortgages, as well as whole life, permanent life, credit, and critical illness insurance for consumer and business clients.

The analyst highlighted the strategic move by Pineapple Financial into non-mortgage insurance products, noting the potential for increased profitability due to the higher commission percentage on these offerings compared to mortgage insurance. This transition is expected to contribute positively to the company’s financial health, as non-mortgage insurance commissions are reported to be more than double those of mortgage insurance.

EF Hutton’s analysis points to Pineapple Financial’s net margin on insurance products being significantly higher than that of mortgage services, 50% compared to 18%. This is attributed to the company’s decision to form an internal sales team to generate leads, which reduces the need to pay external insurance advisors higher commissions for client acquisition.

The firm’s strategy to leverage its fixed cost base while expanding its product offerings is seen as a key factor in its ability to improve net margins. By utilizing existing resources, Pineapple Financial aims to maximize the efficiency of its sales processes and reduce overall costs associated with client outreach and service provision.

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