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Investing.com - Keefe, Bruyette & Woods (KBW) has lowered its price target on Brown & Brown (NYSE:BRO) to $87.00 from $104.00 while maintaining an Underperform rating on the insurance broker’s stock.
The price target reduction follows Brown & Brown’s second-quarter 2025 earnings report and conference call, with KBW citing expectations of slower organic growth, higher interest expense, and higher share counts as key factors.
KBW has adjusted its cash earnings per share estimates for Brown & Brown to $4.12 for 2025, $4.70 for 2026, and $5.20 for 2027, down from previous forecasts of $4.15, $4.75, and $5.25 respectively.
The new price target of $87 represents a multiple of 18.5 times KBW’s 2026 estimated cash earnings per share, a significant reduction from the previous target of $104.
KBW expects "fading pricing-related tailwinds," including sustained property rate decreases and steady casualty rate increases, to continue putting pressure on broker organic growth rates and, consequently, their valuation multiples.
In other recent news, Brown & Brown reported strong financial results for Q2 2025, surpassing analysts’ expectations. The company achieved earnings per share of $1.03, exceeding the forecast of $0.99, and revenue reached $1.29 billion, also above projections. Despite these positive outcomes, the stock experienced a decline in premarket trading due to broader market concerns. In analyst updates, BofA Securities upgraded Brown & Brown from Neutral to Buy, raising its price target to $130, citing valuation as a key factor. Meanwhile, Truist Securities lowered its price target to $120, maintaining a Buy rating, and noted the company’s exposure to the Florida property market downturn. BMO Capital also adjusted its price target downward to $106, describing the recent stock price drop as excessive from a fundamental standpoint. These developments reflect a mixed sentiment among analysts regarding Brown & Brown’s future performance.
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