Brown & Brown stock rating downgraded by Wells Fargo on weak organic growth

Investing.com - Wells Fargo downgraded Brown & Brown (NYSE:BRO) from Overweight to Equal Weight on Wednesday, while lowering its price target to $101.00 from $104.00.

The downgrade comes after Brown & Brown reported organic growth of 3.6% in Q2, below the industry group average of 4.7% and the weakest among its peers, according to Wells Fargo analyst Elyse Greenspan.

The insurance brokerage firm was particularly impacted by deceleration in property rates, which intensified during the quarter, with retail organic growth reaching only 3%, significantly below competitors.

Wells Fargo cited Brown & Brown’s overconcentration in southern markets and property insurance as factors that will likely cause organic growth to trend below peers in the near term.

As a result of the weaker organic growth outlook, Wells Fargo adjusted its price target calculation to 21.8 times its 2026 EPS estimate, positioning the multiple between the 5-year average and low.

In other recent news, Brown & Brown has acquired the assets of Tire Shield, a company providing administrative services for tire and wheel road hazard products and GAP waiver products across various industries. This acquisition is part of Brown & Brown’s strategy to expand its dealer services offerings. Meanwhile, several analyst firms have made adjustments to their price targets for Brown & Brown. Keefe, Bruyette & Woods lowered their price target to $87, citing expectations of slower organic growth and higher expenses. Truist Securities also adjusted their price target to $120, reflecting concerns about the company’s exposure to the Florida property market, although they maintained a Buy rating. BMO Capital reduced their target to $106, describing the recent stock price drop as excessive. In contrast, BofA Securities upgraded Brown & Brown to a Buy rating, raising their price target to $130, noting the company’s recent underperformance relative to the broader market. These developments highlight the varied perspectives among analysts regarding Brown & Brown’s future performance.

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