Arthur J. Gallagher price target lowered to $365 at Wells Fargo

Investing.com - Wells Fargo reduced its price target on Arthur J. Gallagher (NYSE:AJG), a $76 billion market cap insurance broker, to $365.00 from $369.00 on Friday, while maintaining an Overweight rating on the stock. According to InvestingPro data, the company is currently trading slightly above its Fair Value, with analyst targets ranging from $280 to $388.

The price target adjustment reflects modest changes to Wells Fargo’s earnings estimates for the company, with 2025 EPS forecast lowered to $11.13 from $11.21 and 2026 EPS reduced to $13.90 from $14.00, while 2027 estimates remain unchanged at $15.90. Notably, InvestingPro data shows that 7 analysts have recently revised their earnings upwards for the upcoming period, suggesting mixed sentiment among Wall Street analysts.

Wells Fargo attributed the estimate revisions primarily to revenue adjustments, including both organic growth and changes to the AP base, which has grown by approximately 5% since the deal announcement, as well as updated guidance around depreciation for the AP deal and a divestiture in the M&A build.

Arthur J. Gallagher’s brokerage organic growth guidance for the third quarter stands at 5%, with the company noting some large life deals are being pushed out due to prospects for lower interest rates, while full-year organic growth is expected at 6.5%.

The firm’s third-quarter organic growth is projected to reach 6% in Property & Casualty and low single digits in Benefits, with approximately $10 million expected from large life deals in the quarter.

In other recent news, Arthur J. Gallagher & Co. has made significant strides with multiple acquisitions. The company completed its acquisition of AssuredPartners, marking the largest acquisition in its history, expanding its operations in the U.S., U.K., and Ireland. This move has led Goldman Sachs to reinstate coverage on the company with a Buy rating and a $344.00 price target, expecting high-single-digit accretion to its 2027 earnings per share estimates. Additionally, Arthur J. Gallagher acquired Bremer Insurance Agencies, enhancing its retail brokerage presence in the Upper Midwest, though the financial terms were not disclosed.

Further expanding its global footprint, the company also acquired MACK Insurance Services, an Australian broker specializing in agriculture insurance. On the financial analysis front, Goldman Sachs raised its price target for Arthur J. Gallagher to $347.00, maintaining a Buy rating. The firm highlighted the company’s solid mid-quarter update and management’s projection of 6.5% full-year 2025 Brokerage organic growth, slightly exceeding consensus expectations. These developments underscore Arthur J. Gallagher’s strategic expansion and financial performance in the insurance brokerage sector.

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