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On Tuesday, Aon Corp (NYSE:AON), a $76.35 billion insurance and consulting giant, received an upgrade in stock rating from Goldman Sachs, moving from Neutral to Buy, with a maintained price target (PT) of $408.00. According to InvestingPro analysis, the stock is currently trading near its Fair Value. The decision by Goldman Sachs hinges on the anticipation of Aon’s stronger organic growth and free cash flow in 2026, exceeding prior market expectations.
The upgrade comes despite Aon’s first half of 2025 performance not fully meeting Goldman Sachs’ initial forecasts. The company has demonstrated strong financial performance, with revenue growing 20.49% over the last twelve months to $16.36 billion. The firm’s analysts express confidence in Aon’s future, citing a projected 80 basis points increase in 2026 Commercial Risk organic growth over Visible Alpha Consensus. This optimistic outlook is attributed to the fruition of Aon’s investments in talent and a predicted rebound in capital markets activities.
Goldman Sachs also anticipates Aon’s free cash flow in 2026 to surpass Visible Alpha Consensus by 10%, which could lead to more robust capital deployment after 2025. This financial position is seen as a key factor in the rating upgrade, emphasizing the potential for a solid return on investment.
A significant event on the horizon for Aon is its forthcoming June Investor day, which is particularly noteworthy as it marks the company’s first investor day in two decades. During this event, Aon’s management is expected to present its strategy for driving sustainable, long-term growth.
The maintained 12-month target price of $408 reflects Goldman Sachs’ view of a 16% total return opportunity for Aon’s shares. This price target and the recent upgrade underline the firm’s positive stance on Aon’s stock performance potential.
In other recent news, Aon plc reported its first-quarter earnings, which fell short of analyst expectations. The company posted an adjusted earnings per share of $5.67, missing the consensus estimate of $6.03. Revenue for the quarter was $4.73 billion, below the projected $4.84 billion. Despite these misses, Aon experienced a 16% year-over-year increase in total revenue and a 5% rise in organic revenue. The company maintained its 2025 guidance, aiming for mid-single-digit or greater organic revenue growth and double-digit free cash flow growth. Additionally, Aon announced a 10% increase in its quarterly dividend, continuing a 15-year streak of dividend growth.
Piper Sandler recently upgraded Aon’s stock rating from Neutral to Overweight, despite lowering the price target to $378.00 from $384.00. The upgrade was influenced by Aon’s defensive business model and management’s optimism about future operational improvements. Piper Sandler also noted the potential positive impact of Aon’s upcoming analyst day. They anticipate this event could highlight the company’s strengths and strategies, potentially serving as a catalyst for the stock.
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