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Investing.com - Piper Sandler has reduced its price target on Arthur J. Gallagher (NYSE:AJG) to $295.00 from $340.00 while maintaining its existing rating on the insurance broker’s stock. The stock currently trades at $244.39, down significantly from its 52-week high of $351.23, with InvestingPro data showing the stock is now trading near its 52-week low.
The adjustment follows what Piper Sandler described as "a rare miss" against both the firm’s expectations and broader consensus estimates for the quarter, primarily driven by lower-than-anticipated top-line performance. Despite this setback, InvestingPro data shows the company has maintained 11.2% revenue growth over the last twelve months.
The brokerage segment of Arthur J. Gallagher specifically underperformed expectations, with margins coming in below projections and organic growth falling short of forecasts.
Despite these quarterly results, the company’s guidance for both the fourth quarter and full year remained "generally unchanged," according to Piper Sandler’s analysis.
Piper Sandler noted that Arthur J. Gallagher’s middle market focus has not insulated it from the insurance pricing cycle affecting large and specialty commercial segments.
In other recent news, Arthur J. Gallagher reported its third-quarter earnings and revenue, which did not meet analyst expectations. The company posted adjusted earnings per share of $2.32, which was below the consensus estimate of $2.54. Additionally, revenue for the quarter was $3.33 billion, falling short of the anticipated $3.44 billion. This earnings miss was accompanied by a significant drop in the company’s stock price. Following these developments, several financial firms adjusted their price targets for Arthur J. Gallagher. Goldman Sachs lowered its price target to $315 from $362, citing the earnings miss due to lower-than-expected seasonal EBITDAC from the recently acquired AssuredPartners business. Evercore ISI also reduced its price target to $353 from $370, describing the quarter as "mixed" due to a 0.6% miss on brokerage organic growth and a core margin miss. Meanwhile, Keefe, Bruyette & Woods adjusted its price target to $275 from $315, while maintaining a Market Perform rating and reducing its future operating cash EPS estimates. These adjustments reflect the ongoing analysis of Arthur J. Gallagher’s financial performance and future outlook by leading financial institutions.
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