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On Wednesday, BMO Capital Markets adjusted its outlook on Willis Towers Watson (NASDAQ:WTW), reducing the firm’s price target from $325.00 to $320.00. Despite the adjustment, the analyst maintained a Market Perform rating on the company’s shares. According to InvestingPro data, analyst targets for WTW range from $302 to $400, with the stock currently trading near $321.
The revision follows a detailed assessment of Willis Towers Watson’s 2025 guidance, which prompted changes to BMO’s expectations for the company’s earnings before interest, taxes, depreciation, and amortization (EBITDA) and earnings per share (EPS). The analyst noted a slight decrease in EBITDA estimates, approximately 1% lower than the run rate, and a more significant reduction in EPS projections, by roughly 6-7%. InvestingPro analysis reveals that 9 analysts have revised their earnings downward for the upcoming period, though the company is expected to return to profitability this year after posting negative earnings in the last twelve months.
However, the analyst highlighted a silver lining in the form of Willis Towers Watson’s free cash flow (FCF), which appears to be on an upward trajectory. As transformation costs begin to subside, the company’s FCF margin has already surpassed consensus estimates by approximately 140 basis points in the fourth quarter. BMO anticipates a further enhancement in FCF by approximately $200 million and an increase in FCF margin by around 2.5 percentage points by 2025, with continued progress expected into 2026. Current InvestingPro data shows the company maintains a healthy free cash flow yield of 4% and has consistently raised its dividend for 8 consecutive years, demonstrating strong cash management capabilities.
The report also touched upon Willis Towers Watson’s reinsurance joint venture, which is currently seen as a cash outlay in the near term. The joint venture’s potential to contribute to earnings remains uncertain at this point, according to the analyst’s commentary. For deeper insights into WTW’s financial health and growth prospects, including detailed analysis of its joint ventures and comprehensive Fair Value assessments, investors can access the full Pro Research Report available on InvestingPro.
In other recent news, Willis Towers Watson (WTW) has recently made significant strides in its leadership appointments and financial performance. The company reported fourth-quarter earnings and revenue that exceeded analyst expectations, with adjusted earnings per share of $8.13 and a quarterly revenue of $3.04 billion. The firm also announced the appointment of Stephen Kyriacou as Head of Litigation and Contingent Risk Solutions and Senior Director of Transactional Solutions for North America.
In another development, WTW welcomed Mike Giacobbe as its new Client Strategy Leader for Corporate Risk & Broking in North America. These appointments are part of WTW’s commitment to strengthening its position in the industry by leveraging the expertise and experience of its leadership team.
However, BofA Securities reduced WTW’s price target from $349.00 to $341.00, while maintaining a Neutral rating on the stock. This adjustment followed WTW’s fourth-quarter earnings, which revealed a higher adjusted operating margin and a lower tax rate than BofA Securities’ expectations. These are recent developments that have shaped the trajectory of WTW.
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