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Investing.com - BMO Capital has lowered its price target on Brown & Brown (NYSE:BRO) to $106.00 from $122.00 while maintaining an Outperform rating on the insurance brokerage firm.
The price target reduction comes amid a significant 9-10% drop in Brown & Brown’s stock price, which BMO Capital analyst Michael Zaremski described as "overdone" from a fundamental perspective.
Based on BMO’s EBITDA estimates, which include Accession Risk EBITDA that the firm believes is not reflected in consensus figures, Brown & Brown is trading at approximately 14.6 times 2026 estimated EBITDA, about 3% above its historical average but roughly 14% below its average relative to the S&P 500.
The analyst firm examined Brown & Brown’s organic growth, margin history, and valuation trends before concluding that the market’s initial reaction appears excessive from a fundamental standpoint.
BMO Capital suggested the sharp stock movement might reflect some investor capitulation following a June equity raise that increased the company’s share count by approximately 15% at price levels about 9% higher than the current trading price.
In other recent news, Brown & Brown reported its earnings for the second quarter of 2025, surpassing expectations. The company achieved earnings per share of $1.03, beating the forecast of $0.99, and reported revenue of $1.29 billion, which also exceeded projections. Despite these positive results, the company’s stock experienced a decline in premarket trading, reflecting broader market concerns and sector-specific challenges. Additionally, BofA Securities upgraded Brown & Brown’s stock rating from Neutral to Buy, citing valuation reasons. The firm raised its price target for the company to $130.00 from $126.00. This upgrade follows a period of significant underperformance for Brown & Brown, with shares having fallen 26% since early April, while the S&P 500 gained 13%. These developments highlight a mix of positive earnings results and strategic analyst upgrades amidst ongoing market fluctuations.
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