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On Monday, Jefferies analyst Andrew Andersen revised the price target for Willis Towers Watson (NASDAQ:WTW) to $373.00, down from the previous target of $382.00. Currently trading at $325.79 and near its 52-week high of $334.99, the stock has gained 4.01% year-to-date. Despite this adjustment, Andersen maintained a "Buy" rating on the company’s shares. The modification in the price target was attributed to a combination of factors, including investments in reinsurance, foreign exchange impacts, and increased unallocated expenses. These elements have led to a reduction in earnings per share (EPS) estimates, although this was partially offset by higher benefits from brokerage businesses. According to InvestingPro, 11 analysts have recently revised their earnings estimates downward for the upcoming period.
Andersen’s commentary highlighted that the firm’s organic growth and segment margins have remained largely consistent, despite the adjustments made to the EPS estimates. With analyst price targets ranging from $302 to $400, Jefferies’ outlook for Willis Towers Watson remains more optimistic than the consensus for the fiscal years 2025 and 2026, with expectations for superior margins. The firm’s analysis does not align with the consensus, which they believe does not fully account for the recent TRANZACT disposition and its subsequent benefits. For deeper insights into analyst perspectives and detailed financial analysis, InvestingPro subscribers can access comprehensive research reports covering 1,400+ top stocks, including WTW.
The TRANZACT deal, according to Andersen, along with the positive impact from scale and efficiencies in Risk & Broking (R&B), is anticipated to contribute to a narrative of exceeding expectations and upward revisions in the future. This perspective suggests that Jefferies foresees Willis Towers Watson outperforming market expectations, driven by these strategic advantages.
The reiteration of the "Buy" rating indicates Jefferies’ continued confidence in Willis Towers Watson’s performance. Andersen’s statement concluded with an affirmation of this stance, signaling a belief in the company’s potential to surpass market predictions and deliver shareholder value through strategic initiatives and operational efficiencies.
In other recent news, Willis Towers Watson has been the subject of several adjustments by financial analysts. Goldman Sachs reduced the company’s 12-month price target to $378, citing influences from non-core items such as foreign exchange rates and reinsurance joint venture startup costs. Despite this, the firm expressed confidence in Willis Towers Watson’s strong free cash flow growth projection and margin expansion. BMO Capital Markets also adjusted its outlook on the company, reducing the price target to $320, due to changes in expectations for earnings and EBITDA.
In addition, BofA Securities cut the company’s price target to $341, following the release of the fourth quarter 2024 earnings which revealed a higher adjusted operating margin and a lower tax rate than expected. The firm’s share repurchase activity for the fourth quarter was in line with expectations, totaling $350 million.
On the operational front, Willis Towers Watson launched a new accelerator for its Radar rating and analytics engine, aimed at enhancing insurance pricing and underwriting processes. The Radar Accelerator for Guidewire (NYSE:GWRE) is expected to deliver real-time, sophisticated analytics for insurers. Furthermore, the company appointed Stephen Kyriacou as Head of Litigation and Contingent Risk Solutions, and Senior Director of Transactional Solutions for North America. These recent developments reflect Willis Towers Watson’s ongoing commitment to innovation and financial strength.
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