LegalZoom's Business Formations Data Boosts Stock Rating

LegalZoom (LZ), a leading online platform for legal services, has received a double upgrade from analysts at Truist Securities, who cited "incrementally positive" business formations data as the primary reason for the upgrade. The analysts raised their price target for LZ stock to $10.00, up from their previous target of $7.00, and maintained a "Buy" rating. This article explores the significance of this upgrade and the underlying data that drove the analysts' decision.

The upgrade comes on the heels of LegalZoom's recent data release, which showed that approximately 30% of new businesses are formed in the first quarter, up from 27% in 2021. This trend, coupled with the growing popularity of home-based and part-time entrepreneurship, has driven demand for LegalZoom's services. The company's focus on LLC formations, which account for 48% of its business owners' primary motivations, has also contributed to its revenue growth.



The analysts at Truist Securities noted that LegalZoom's business formations data indicates a strong and growing demand for the company's services. This, in turn, suggests that LegalZoom's revenue and earnings growth prospects are robust. The upgrade reflects the analysts' confidence in LegalZoom's ability to capitalize on this trend and continue to grow its customer base.

LegalZoom's subscription plans, which provide access to legal consultations and ongoing support, have also contributed to the company's growth. As entrepreneurs form LLCs and seek to maintain compliance with legal requirements, they are more likely to subscribe to LegalZoom's services for continued assistance with legal needs and business management solutions.

The growing trend of entrepreneurship, particularly among women, also presents an opportunity for LegalZoom to expand its customer base and tap into new revenue streams. With women now comprising 43% of self-employed Americans, LegalZoom can cater to this growing demographic by offering tailored services and support.

In conclusion, LegalZoom's "incrementally positive" business formations data has driven a double upgrade from Truist Securities analysts, who raised their price target for LZ stock to $10.00 and maintained a "Buy" rating. The upgrade reflects the analysts' confidence in LegalZoom's ability to capitalize on the growing trend of entrepreneurship and continue to grow its customer base. As LegalZoom continues to adapt its business model to cater to the needs of home-based and part-time entrepreneurs, as well as the growing demographic of female entrepreneurs, the company is well-positioned to maintain its strong growth trajectory.