Verisk Is Extremely Oversold-2 Reasons Contrarians Are Circling

After a bruising start to the year that has accelerated sharply into February, shares of Verisk Analytics, Inc (NASDAQ: VRSK) are trading around $170. That means they’re down roughly 25% since the end of January, having lost close to 50% from last summer’s highs. This has not only wiped out years of steady gains but also sent the stock back to the same prices it traded at in 2023.

For Versik investors, it’s been a slow, steady, and painful descent, with many compounding factors. A disappointing earnings report last quarter intensified investor concerns around slowing growth. This valuation looked stretched relative to that growth, and whether expectations tied to AI-driven upside had simply run too far ahead of reality. What was once seen as a steady stock suddenly found itself quite exposed and vulnerable. 

The result has been relentless selling. But with earnings due next week and technical indicators flashing extreme readings, contrarian investors are starting to ask themselves, has the market overdone it? Here are two reasons they might be onto something. 

Reason #1: Sentiment Is Completely Washed Out

The most obvious reason is technical. With this latest phase of selling, Verisk’s relative strength index (RSI) has sunk to 20, one of the lowest readings in the stock’s trading history. An RSI at that level signals extremely oversold conditions and often indicates that the selling is nearing exhaustion. 

This is because stocks rarely decline in a straight line forever. At some point, short sellers take profits, and value-focused buyers begin to step back in. Even if the stock’s near- to mid-term prospects remain uncertain, sharp rebounds often follow this kind of one-way selling.

We may have seen early signs of that shift in the Feb. 11 session, when the stock popped off the lows to log its first green day in more than two weeks.

To be sure, one positive session doesn’t confirm a bottom, but after a stretch of near-uninterrupted selling, it does signal that downside momentum might be starting to wane.

For contrarians, the logic here is straightforward. When sentiment becomes this negative and technical indicators reach these rare extremes, it feels like the market might have priced in the worst-case scenario.

Reason #2: Analysts Are Beginning to Lean Back In

These extreme technical setups are made even more compelling when accompanied by fresh analyst support. On Feb. 11, the team at Wells Fargo reiterated its Overweight rating on Verisk and issued a fresh $237 price target. From current levels, that implies roughly 35% upside. 

This latest update isn’t about blind optimism in the stock’s ability to get back to last summer’s record highs—instead, it’s about acknowledging that the market might have been over-eager in its selling.

The fact that at least one major analyst is willing to reiterate a bullish stance at a time when the RSI is printing record lows suggests the fundamental story may not be as broken as the price action implies. 

That matters, particularly with earnings due on Feb. 18. Expectations are now far lower than they were last quarter, and in situations like this, that creates a meaningful risk/reward profile.

The Line in the Sand Ahead of Earnings

Technically, the Feb. 11 low around the $165 level is the critical line level to watch. A decisive break below that support would signal that sellers remain firmly in control and that further downside in the short-term is almost guaranteed. That would likely invite fresh momentum selling and undermine the contrarian thesis before it has a chance to develop.

Conversely, if the stock continues to show signs of buying at this level and consolidates above $170 ahead of the company's earnings report, the setup changes. The fresh presence of stabilising price action at these recent levels of extreme pessimism could set the stage for a sharp snapback rally if results are judged to be even okay. In situations like this, it doesn’t take much good news to trigger outsized upside moves.

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The article "Verisk Is Extremely Oversold—2 Reasons Contrarians Are Circling" first appeared on MarketBeat.