U.S. stocks lower as investors rotate out of tech ahead of Jackson Hole
On Thursday, BMO Capital Markets initiated coverage on Baldwin Insurance (NASDAQ:BWIN), currently trading at $44.64 with a market capitalization of $5.25 billion, assigning an Outperform rating and setting a price target at $53.00. The new coverage by BMO Capital comes with a positive outlook on the insurance brokerage’s future performance. InvestingPro analysis indicates the stock is currently undervalued based on its Fair Value estimate.
Baldwin Insurance’s current trading price is approximately 13.6 times the estimated EBITDA for 2027, which is roughly 4% below the company’s historical average. The stock has demonstrated strong performance with a 55% return over the past year, despite showing considerable price volatility. BMO Capital’s analysis suggests that Baldwin Insurance’s stock should be valued closer to 17 times its 2027 EBITDA, positioning it as having the highest upside potential in the insurance brokerage sector. This is despite the fact that short interest in the company is near its all-time high, even as its capital position shows signs of improvement.
The $53.00 price target set by BMO Capital is based on a multiple of 16.2 times, derived from a combination of valuation methods. The firm used a 65% weighting of the multiple applied to peers Arthur J. Gallagher & Co. (AJG) and Brown & Brown, Inc. (BRO), along with a 35% weighting of a 25% discount to the higher multiple of Goosehead Insurance (GSHD). These weightings reflect Baldwin Insurance’s net revenue estimates for 2027, focusing on its middle market and MGA/embedded businesses.
BMO Capital’s coverage initiation and the resulting Outperform rating indicate a confidence in Baldwin Insurance’s market valuation and its potential for growth. The detailed analysis by the firm underscores the company’s attractive valuation setup and the opportunities it presents for investors within the insurance brokerage industry. For deeper insights into Baldwin Insurance’s valuation and growth prospects, including 8 additional ProTips and comprehensive financial analysis, visit InvestingPro.
In other recent news, Baldwin Insurance Group Inc. reported its fourth-quarter 2024 financial results, which showed the company meeting earnings per share (EPS) expectations and slightly exceeding revenue forecasts. Baldwin posted an EPS of $0.27, aligning with analyst predictions, while revenue reached $329.9 million, surpassing the anticipated $327.01 million. The company experienced a strong full-year organic revenue growth of 17%, supported by strategic initiatives such as expanding its Medicare business and launching a digital embedded home insurance initiative. Additionally, Baldwin’s adjusted EBITDA grew by 25%, reaching $312.5 million, and adjusted free cash flow increased by 97% year-over-year to $134.9 million.
In terms of analyst actions, while specific upgrades or downgrades were not highlighted, the financial community remains attentive to Baldwin’s strategic moves and financial performance. The company’s CEO, Trevor Baldwin, expressed confidence in future growth, despite potential risks from reinsurance pricing impacts due to California wildfires. Baldwin Insurance projects continued revenue and EBITDA growth in 2025, with expectations of reducing net leverage below 4x by the third quarter. These developments underscore Baldwin’s robust market position and strategic focus amid challenging insurance market conditions.
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