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On Friday, Raymond (NSE:RYMD) James maintained a Strong Buy rating on Baldwin Insurance (NASDAQ:BWIN), a $2.8 billion market cap insurance company, but reduced the price target from $60.00 to $55.00. The adjustment follows Baldwin Insurance’s first-quarter results for 2025, which aligned with estimates but showed a stock decline of approximately 3%. The dip was attributed partly to lower-than-anticipated organic revenue growth in its Insurance Agency Services (IAS) business. According to InvestingPro data, BWIN has demonstrated significant volatility in its stock price movements, with a beta of 1.77, though it has delivered a strong 22.4% return over the past year.
The company reported a 12% year-over-year increase in adjusted EBITDA, reaching $113.8 million for the first quarter, alongside an 80-basis point margin expansion to 27.5%. While currently not profitable over the last twelve months, InvestingPro analysis suggests net income is expected to grow this year, with analysts forecasting earnings of $3.06 per share for fiscal 2025. Baldwin Insurance also saw an increase in adjusted free cash flow (FCF), generating $25.8 million compared to $24.3 million in the same quarter the previous year. Despite these positive figures, the company paid out $123 million in earn-outs during the first quarter and an additional $37 million in April. Management expects to pay another $22 million in the second quarter, which will settle the majority of its remaining earn-out obligations.
In the IAS segment, organic revenue growth was 3% year-over-year in the first quarter, below Raymond James’ expectation of 8%. This was partly due to the timing of new business and a roughly 3.5 percentage point negative impact from rate and exposure on renewals, influenced by a more competitive insurance rate environment. This contrasts with the 4.5 percentage point benefit from rate and exposure experienced in the first quarter of the previous year. However, sales velocity remained robust at 14%, and client retention rates improved during the quarter.
The Underwriting and Consulting Technical Services (UCTS) segment experienced a significant 32% year-over-year organic revenue increase in the first quarter, driven by strong performance in the multifamily and home portfolios, which saw 17% and 29% organic commissions and fees growth, respectively. Additionally, the momentum at Juniper Re and the launch of a multifamily captive contributed to the segment’s growth.
Lastly, the Management Information Services (NASDAQ:III) (MIS) segment saw a 10% year-over-year organic revenue increase, bolstered by new business generation across builder and mortgage franchises and a notable performance in the Medicare division during the annual enrollment period. Based on InvestingPro’s Fair Value analysis, BWIN currently appears undervalued, presenting a potential opportunity for investors. For deeper insights into Baldwin Insurance’s financial health, valuation metrics, and growth prospects, along with 7 additional ProTips, check out the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
In other recent news, Baldwin Insurance Group Inc. reported its first-quarter 2025 earnings, showing a slight beat on earnings per share (EPS) but missing revenue forecasts. The company posted an EPS of $0.65, surpassing the expected $0.64, while revenue came in at $413.4 million, falling short of the anticipated $418.35 million. Despite the revenue miss, Baldwin Insurance achieved a 10% organic revenue growth and a 12% increase in adjusted EBITDA to $113.8 million. Additionally, the company maintained its full-year guidance, expecting double-digit overall growth. In terms of strategic developments, Baldwin launched new products and acquired a platform to enhance its offerings. The company also finalized the capitalization of its Builder Reciprocal Insurance Exchange, aimed at supporting growth in its builder channel. Furthermore, S&P upgraded Baldwin’s rating to stable, and Moody’s affirmed its B2 rating with a change in outlook from negative to stable.
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